Maintaining ethical conduct is a core regulatory requirement for all licensed insurance professionals. Among the following scenarios, which statements accurately describe a violation classified as an Unfair Trade Practice? (Select all that apply)
- A producer commits twisting by knowingly providing an incomplete comparison of two policies' benefits to induce a policyowner to lapse their existing coverage.Answer
- A broker engages in defamation by publishing a newsletter that makes derogatory and false statements regarding a competitor's claims-paying ability.Answer
- CAn advisor commits twisting by offering to pay a prospective client's first month of premiums out of pocket to close a difficult sale.
- DAn insurer engages in unfair discrimination by charging varying premiums to individuals of the same age and gender based on statistically validated differences in life expectancy.
Answer
The statements describing a producer using incomplete comparisons to induce lapsing (twisting) and a broker publishing false derogatory statements about a competitor (defamation) correctly identify Unfair Trade Practices.
The correct statements accurately define two major Unfair Trade Practices. Twisting occurs when a producer makes incomplete or misleading comparisons to induce a client to lapse or surrender an existing policy. Defamation occurs when false, maliciously critical, or derogatory statements are made regarding an insurer's financial condition to injure their reputation.
Step-by-Step Solution
Key Concept
Statutory Definitions of Unfair Trade Practices