Unfair trade practices

Fraud

A fraudulent insurance act is any illegal act that is committed while engaged in the business of insurance and intended to defraud. Example: Ben wrote a new policy for a customer and collected the insurance premium. However, he never turned in the insurance application to the company and kept the premium.

Unfair Comparison

Agents and companies are not permitted to make unfair comparisons of policies, benefits, rates or compare non-comparable policies.

Misrepresentation

Cannot misrepresent or falsely advertise terms or benefits of a policy; must be accurate and honest.

Claims Settlement

Claims adjusters are also held to high ethical standards and are subject to disciplinary action if found engaging in unfair claims settlement practices. Some examples of unfair claims settlement practices: Misrepresenting material facts of the claim to claimants, denying claims without conducting reasonable investigations, or failing to implement standards for proper investigation of claims.

Twisting

Convincing the customer to cancel already existing insurance and buy another policy from the agent, to the detriment of the insured.

Unfair Discrimination

Giving a lower or higher rate than another insured in identical circumstance or accepting a bribe from a customer to provide insurance or a lower premium.

Rebating or Prohibited Inducements

Giving or offering some benefit other than those specific in the policy - gifts, cash, etc. - to get the customer to buy.

Boycott, Coercion, Intimidation

It is illegal to boycott, coerce or intimidate anyone to result in an unreasonable restraint of or monopoly in the insurance business. Example: An agent decided to run a local independent agency out of town by organizing all of the groups he was affiliated with in town to spread the word that the agency principles were involved in the drug cartel. The accusation was false but resulted in the agency losing many customers. This is an example of the unfair trade practice of boycott.

False Advertising

It is illegal to create or circulate any advertisement about an insurance business or agent that is untrue, deceptive or misleading.

Controlled Business

Licensees may not become licensed solely to insure property in which they have an interest. The interest may be directly or through family or employment relationships. Example: Bob's family is in the real estate business. Their firm includes residential development, real estate sales and mortgage brokerage. Bob would like to get his insurance license so that he can write the homeowner insurance on the properties they sell. This is considered controlled business and Bob may not get a license solely for that purpose.

Defamation

Oral or written statement that is false and intended to defame the character of any insurer or agent.

Sliding

is when an agent slides in a coverage or product without the insured's consent or implies that the additional product is required by law when it's not. Example: Sally really improved her cross sell numbers when she included the premium for an umbrella policy in with the homeowner premium so customers thought it was just one policy. After all, she knew they needed the umbrella coverage.