Ethics and Unfair Practices in Insurance Flashcards

What is 'rebating' in DC insurance law?

Answer: Offering a prospect something of value not specified in the policy as an inducement to purchase insurance

Rebating involves offering or giving anything of value (cash, gifts, services) not specified in the policy as an inducement to purchase insurance.

Which of the following best describes 'unfair discrimination' in DC insurance?

Answer: Charging different premiums to insureds with identical risk profiles based on non-actuarial factors such as race or religion

Unfair discrimination means treating insureds differently based on prohibited characteristics (race, religion, national origin, sex in some lines) rather than actuarial risk factors.

Under DC insurance regulations, which of the following is an example of a 'material misrepresentation' on an insurance application?

Answer: Failing to disclose a prior DUI conviction when applying for auto insurance

Failing to disclose a DUI conviction on an auto application is a material misrepresentation because it directly affects the underwriting decision and premium.

What is the purpose of DC's insurance guaranty association?

Answer: To protect DC policyholders when a licensed insurer becomes insolvent

The DC Life and Health Insurance Guaranty Association and the DC Insurance Guaranty Association protect policyholders from losses due to an insolvent insurer.

Which prohibited practice involves an agent convincing a client to replace a suitable existing policy with a new one primarily to generate commissions?

Answer: Churning

Churning involves repeatedly replacing or modifying an insured's existing coverage for the purpose of generating new commissions, not to benefit the client.

An agent in DC 'slides' additional coverage onto a client's policy without their knowledge. What is this practice called?

Answer: Sliding

Sliding involves adding unrequested coverage or products to a policy without the insured's knowledge or informed consent.