California Insurance Code & EthicsQuestion 46 of 315
An agent tells a prospect that a competing insurer is on the verge of financial collapse in order to convince the prospect to buy from her own company. The competitor is in fact solvent. Under the Unfair Practices Act, this conduct is best described as:
a.Twisting, because it involves a misrepresentation about another insurer
b.Permissible competitive speech, because no contract has been signed
c.Defamation of an insurer, because it makes a false statement injuring the reputation of another insurer
d.Boycott or coercion, because it pressures the consumer
Explanation
Cal. Ins. Code §790.03(b) defines defamation as making, publishing, or circulating any false statement that is calculated to injure any person engaged in the business of insurance. False statements about a competitor's solvency fall squarely within this definition, regardless of whether a sale results.
Law Reference: Cal. Ins. Code §790.03(b)Practice all 315 questions free — no signup required.
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Sen Lin, PrepPass Founder · Verified against California Life & Health Insurance License Exam · How we review
Reviewed by John Zihao Zhang — California-Licensed Life Insurance Agent (CA Dept. of Insurance License #4396095 — verify)