Florida 2-15 Life, Health and Variable Annuity AgentFlorida Laws and Regulations Common to Life and Health InsuranceMedium
An insurance company operating in Florida is found to be engaging in an unfair method of competition by selectively denying claims based on the race of the policyholders. This action would most directly fall under which prohibited unfair trade practice?
- ADefamation.
- BTwisting.
- CMisrepresentation.
- DUnfair discrimination.
Show answer & explanationAnswer & explanation
Correct answer: D. Unfair discrimination.
Selectively denying claims based on the race of policyholders is a clear example of unfair discrimination. Florida law prohibits insurers from making or permitting any unfair discrimination between individuals of the same class and equal expectation of life in the rates charged, benefits payable, or any terms or conditions of their insurance contracts.
Why the other options are wrong
- A. Defamation involves making false, derogatory statements about another insurer or agent, which is unrelated to claim denial practices.
- B. Twisting involves inducing policyholders to replace policies through misleading comparisons, which is not the issue here.
- C. Misrepresentation involves false statements about policies, not discriminatory claim practices.
Unfair Discrimination
The practice of making or permitting any unfair distinction between individuals of the same class and equal expectation of life in insurance rates, benefits, or terms.
- Prohibited by Florida insurance law.
- Includes discrimination based on race, religion, national origin, etc.
- Applies to all aspects of the insurance business, including underwriting and claims.
Memory trick: Treat all fairly, no bias, no fraud.