Unfair Trade Practices

Rebating

Any inducement offered to the insured in the sale of insurance products that is not specified in the policy. Both the offer and the acceptance of a rebate are illegal. May include: -rebates of premiums payable on the policy -special favors or services -advantages in the dividends or other benefits -stocks, bonds, securities, and their dividends or profits

False advertising

-advertising covers a wide scope of communication, from publishing an ad in a newspaper or magazine, to broadcasting a commercial on television. Advertisements cannot include any untrue, deceptive, or misleading statements that apply to the business of insurance or anyone who conducts it It is prohibited to advertise or circulate any materials that are untrue, deceptive, or misleading. False advertising specially includes misrepresenting any of the following: -terms, benefits, conditions, or advantages of any insurance policy -any dividends to be received from the policy, or previously paid out -financial condition of any person or the insurance company -the true purpose of an assignment or loan against a policy -representing an insurance policy as a share of stock, or using names or titles that may misrepresent the true nature of a policy

Agents signing certain blank policies

-any agent or limited representative who signs any blank contract or policy of insurance is guilty of a class 3 misdemeanor and, upon conviction, will be punished by a fine in an amount between $1000 and $5000 -one exception to this rule: transportation ticket policies of accident insurance and baggage insurance policies may be countersigned when blank for issuance only through coin-operated machines

False statements in applications for insurance

-any agent or other person who knowingly or willfully makes any false or fraudulent statement or representation in an application for insurance or makes any fraudulent statement for the purpose of obtaining a fee, commission, money or benefit from any insurance company in this state will be guilty of a class 1 misdemeanor

False pretenses and cheats

-any person who knowingly, by means of any kind of false pretense, obtains or attempts to obtain from any person any money, goods, property, services, or other thing of value with the intent to cheat or defraud any person, may be found guilty of a felony -if the value of the money or other thing of value is more than $100,000 the violation is a class c felony -if the value of the thing is less than $100,000, the violation is a class h felony

Unfair trade practice

-considered an unfair trade practice to knowingly commit an unfair method of competition or to engage in such actions with enough frequency that the commission of unfair marketing practices indicates a general business practice

Unfair discrimination

-discrimination in rates, premiums, or policy benefits for persons within the same class or with the same life expectancy is illegal. no discrimination may be made on the basis of an individual's marital status, race, national origin, gender identity, sexual orientation, creed, or ancestry unless the distinction is made for a business purpose or required by law -insurers cannot refuse to insur to continue to insure an individual, limit the amount, extent, or kind of coverage solely because of blindness or partial blindness or deafness or partial deafness. -insurers are not allowed to discriminate in this manner because of the insureds race, color, national origin, or ethnic origin -companies transacting business in NC cannot discriminate in favor of any person

Embezzlement by agents or brokers

-if any insurance agent or broker embezzles or fraudulently uses or withholds any money received as a result of acting as an agent, they can be charged with a felony

misrepresentation

-it is illegal to issue, publish, or circulate any illustration or sales material that is false, misleading, or deceptive as to policy benefits or terms, the payment of dividends etc

False financial statements

-those that are intended to deceive public officials or the general public about the financial condition of an insurer -often occurs when an important fact about the financial status of an insurer is deliberately withheld in order to present the company in a more favorable light -any person who willfully does this can be charged with a class 1 felony

Rebates and premiums

Rebates and charges of excess premium: insurers, agents, brokers or limited representatives cannot knowingly charge any excess premium for any policy of insurance except in accordance with the applicable filing approved by the commissioner. offers to pay or give anything as an inducement to insurance or after insurance has been effected are prohibited Rebates of premium on credit insurance: -unlawful for any insurer carrier, officer, agent, or representative of a company writing credit life and credit accident and health insurance to premit any agent or rep to retain any portion of funds received for the payment of losses or to pay, give, or offer to pay any rebate, discount, abatement, credit, or reduction of the premium to any loan agency, broker, or to any creditor of the debtor on whose account the insurance was issued -does NOT prohibit the payment of commissions to a licensed insurance agent on the sale of a policy Payment of premiums to agent: -any agent, broker, or limited rep who acts for a person other than himself while negotiating a contract of insurance, for the purpose of receiving the premium, is deemed to be the company's agent. any agent, broker, or rep knowingly procuring payment by fraudulent representations will be guilty of a class 1 misdemeanor

unauthorized insurers

Under the Uniform Unauthorized Insurers Act, no person, corporation, association or partnership in NC can do any of the following: -act as an agent for any unauthorized insurer -negotiate or place insurance coverage with an unauthorized insurer -aid an unauthorized insurer in selling insurance or in transacting insurance business in this state by fixing rates, adjusting, or investigating losses, inspecting or examining risks -make, negotiate, or aid in the sale of insurance coverage in this state for state for property or risk in another state, territory, or district of the US The following acts, if performed in this state, are deemed to be an insurance business transaction: -maintaining any agency or office where any acts in furtherance of an insurance business are transacted -maintaining files or records of insurance contracts -receiving premium payments for contracts of insurance -the issuance or delivery of insurance contracts to residents of this state Any insurer or individual violating any of these provisions by transacting insurance while not authorized to do business within this state, will be subject to a penalty between $1000-$5000 for each offense, and no more than $10000 for each offense following the initial notice by the commissioner -Each day during which a violation occurs constitutes a separate offense

Twisting

a misrepresentation, or incomplete or fraudulent comparison of insurance policies that persuades an insured/owner, to his or her detriment, to cancel, lapse, switch policies, or take out policy with another insurer

Boycott, Coercion, and Intimidation

it is illegal to be involved in any activity of boycott, coercion, or intimidation that is intended to restrict fair trade or to create a monopoly. this would include unfair behavior that influences not only clients, but competing agents and brokers -coercion is to require, as a condition to a loan, that the applicant purchase insurance from a specific insurer

Defamation

occurs when an oral or written statement is made that is intended to injure a person engaged in the insurance business. Also applies to statements that are maliciously critical of the financial condition of any person or a company