DC Ethics and Unfair Practices in Insurance 2

Question 1

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

Accepted Answer

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

Answer

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

Question 2

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

Accepted Answer

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

Answer

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

Question 3

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

Accepted Answer

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

Answer

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.

Question 4

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?

Accepted Answer

Anti-rebating rules

Answer

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.

Question 5

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

Accepted Answer

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

Answer

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

DC - District of Columbia Insurance Practice Test

DC - District of Columbia Insurance Practice Test

DC Ethics and Unfair Practices in Insurance 2