State RegulationsAZ specificDifficulty 2/5
A producer circulates a letter to his clients claiming that a rival insurer is 'insolvent and about to collapse,' knowing the rival is financially sound. Under A.R.S. 20-445, this letter is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
A.R.S. 20-445 prohibits false or maliciously critical statements about a competitor's financial condition. The producer's letter is a textbook violation: it is knowingly false, it attacks the rival's solvency, and it is circulated to consumers whose confidence in the insurer it is designed to destroy. The Director may enforce the prohibition through administrative action.
Why the other options are wrong
- B) Wrong because knowingly false attacks on a competitor's solvency are not protected commentary; they are the conduct A.R.S. 20-445 prohibits.
- C) Wrong because the producer's subjective belief is no defense when the statement is false and maliciously critical under A.R.S. 20-445.
- D) Wrong because Arizona's own statute applies; defamation of an insurer is regulated by A.R.S. 20-445, not left to federal antitrust law.
Memory hook
Crying 'insolvent!' about a sound rival is defamation under 20-445.