Ethics and Unfair Practices in Insurance Flashcards

Under DC's insurance code, what is 'defamation' as an unfair practice?

Answer: Making false oral or written statements that injure the reputation of another insurer or producer

Defamation as an unfair trade practice is making false, maliciously critical, or derogatory statements about another insurer's financial condition or products.

Which of the following agent behaviors is required under DC's duty of good faith and fair dealing?

Answer: Fully disclosing all material facts about a policy to a prospective client

Agents owe a duty of good faith and fair dealing, which includes full disclosure of material policy terms, including exclusions and limitations.

What is 'controlled business' in DC insurance licensing, and why is it restricted?

Answer: Insurance sold primarily to the producer's own family or employer; restricted to prevent licensing solely for personal gain

Controlled business is insurance placed primarily for the producer's own benefit (covering themselves, family, or employer). DC limits this to prevent people from obtaining a license solely to earn commissions on their own coverage.

A DC producer receives a $200 gift from an applicant as a thank-you after placing a policy. The producer keeps the gift. This most likely violates which rule?

Answer: Anti-rebating rules

Accepting a gift of value from an insured in connection with an insurance transaction can constitute rebating in reverse (insured rebating the producer), though anti-rebating rules typically govern benefits flowing from producer to insured.

Which of the following is an allowable exception to DC's anti-rebating prohibition?

Answer: Providing a nominal promotional item worth under $25 with the insurer's name on it

Nominal advertising or promotional items (typically under $25) bearing the insurer's or producer's name are generally permitted as exceptions to rebating rules.

Under DC insurance law, what is 'misrepresentation in advertising'?

Answer: Making untrue statements about policy benefits, exclusions, or the insurer's financial condition in an advertisement

Misrepresentation in advertising involves making false or misleading statements in any form of public communication about insurance products or the insurer.