Questions and Answers
What occurs when an individual or entity makes false, deliberately malicious and derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business?
An example of an unfair claim settlement practice would include:
What do the producer's remarks about membership in the country club constitute?
Rebating
All of the following acts are considered unfair trade practices, EXCEPT:
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What is considered an unfair claims practice?
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What was the producer doing when he only mentioned the benefits of the long-term care policy?
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In underwriting of insurance policies, some amount of discrimination is:
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All of the following, if performed frequently enough, are unfair claims settlement practices, EXCEPT:
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The practice of using misrepresentation to induce a policyholder to replace a policy is called:
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Which of the following is FALSE regarding Don's interaction with a community member?
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The Unfair Trade Practices Act is divided into which two parts?
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Making a misleading statement to induce a person to lapse, surrender, or convert an insurance policy is known as:
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What practice is illegal when attempting to influence a financial institution's business?
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Was the insurer acting within its legal rights when requiring multiple submissions of claims forms?
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It is illegal to do any of the following, EXCEPT:
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Which of the following is NOT considered to be an unfair claims settlement practice?
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What action can the State Commissioner of Insurance take against insurers using unfair marketing practices?
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What is the term for circulating a maliciously critical statement about any insurer's financial condition?
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Study Notes
Defamation
- Defamation involves making false, derogatory statements about an insurer's financial condition intended to harm the insurer's business reputation.
Unfair Claim Settlement Practices
- Discouraging a claimant from arbitration by implying potential lower outcomes than a settlement offer is deemed unfair.
- Failing to acknowledge coverage within a reasonable timeframe after receiving proof of loss is considered an unfair claims practice.
Rebating
- Offering benefits (like country club membership) to encourage policy purchases constitutes rebating and is not allowed unless specified in the contract.
Replacement of Policies
- Replacement occurs when a new life insurance policy supersedes an existing one; it is legal unless done through misrepresentation (twisting).
Churning
- Churning involves misrepresentation to persuade a policyholder to replace a policy for the producer's commission gain.
Discrimination in Underwriting
- Legitimate discrimination in underwriting is based on risk assessment; unfair discrimination based on race or other factors is illegal.
Boycotting
- Collaborating with a real estate firm to boycott a conservative bank is an illegal practice aimed at damaging the bank's financial power.
Misrepresentation
- Presenting only the benefits of a policy without detailing conditions leads to misrepresentation, which is misleading to the customers.
Delay Tactics
- Requesting both a preliminary claim report and proof of loss that ask for the same information is typically a delay tactic and deemed illegal.
Cease and Desist Orders
- The State Commissioner of Insurance can issue cease and desist orders against unfair marketing or claim habits, with significant fines for non-compliance.
Twisting
- Twisting involves making misleading statements to induce someone to surrender or convert their policy, seen as an unfair trade practice.
Ethical Standards
- Producers must adhere to ethical standards to avoid unfair discrimination between individuals of the same class when determining insurance rates.
Reporting and Communication
- Agents engaging in defamation can do so indirectly by suggesting an insurer may be unreliable, contributing to a harmful narrative.
Legal Definitions
- Unfair marketing practices and unfair claims practices are two key divisions within the Unfair Trade Practices Act.
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Description
Test your understanding of defamation in the context of ethics with this set of flashcards. Learn how false statements can adversely affect an insurer's reputation and business. Enhance your knowledge about the implications of defamatory actions in the insurance sector.
