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Question

Difficulty: EasyUnfair Trade Practices

During a meeting with a prospective business client, an insurance agent falsely claims that a rival insurance company is currently under state investigation and financially insolvent. The agent makes these statements to persuade the client to switch their coverage to the agent's own company. Which unfair trade practice has the agent committed?

  1. DefamationAnswer
  2. B
    Twisting
  3. C
    Rebating
  4. D
    False advertising

Answer

Defamation
The correct answer accurately identifies that making false, maliciously critical, or derogatory statements calculated to injure an insurer or any person engaged in the business of insurance is the specific unfair trade practice known as defamation.

Step-by-Step Solution

1
Analyze the specific behavior exhibited by the agent in the scenario.
The agent made false and derogatory claims regarding a competitor's financial solvency.
Identifying the exact nature of the prohibited act is required to match it to the correct statutory definition.
2
Classify the behavior according to state insurance regulations regarding unfair trade practices.
The act of circulating false information designed to injure another insurer's reputation or business is legally defined as defamation.
State laws distinctively categorize different prohibited marketing behaviors to ensure appropriate enforcement.

Key Concept

Defamation in Insurance Practices
Estimated Time:45s
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Topics

Unfair Trade Practices

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