A compliance officer at a regional brokerage firm is reviewing proposed business strategies to ensure alignment with state insurance regulations. Which of the following proposed activities are prohibited as Unfair Trade Practices? (Select all that apply)
- Refusing to issue commercial property coverage strictly due to the geographic location of the risk, despite lacking any actuarial data to justify the decisionAnswer
- Conditioning the approval of a commercial real estate loan on the applicant's agreement to purchase property insurance specifically through the lending institution's affiliated agencyAnswer
- CAdjusting the premium rates for commercial auto fleets within the same industry class based exclusively on each applicant's documented historical loss ratio
- DProviding a prospective commercial client with an agency-branded promotional item valued at fifteen dollars during an initial risk assessment meeting
Answer
The prohibited activities are refusing coverage based on location without actuarial data (unfair discrimination) and conditioning a loan on purchasing insurance through a specific affiliate (coercion).
Refusing coverage strictly based on geographic location without actuarial support is illegal redlining (unfair discrimination). Furthermore, forcing a consumer to purchase insurance from a specific entity as a prerequisite for a loan is prohibited as coercion.
Step-by-Step Solution
Key Concept
Identifying Statutory Unfair Trade Practices