State RegulationsMA specificDifficulty 1/5
Which of the following is the unfair practice of false financial statements under M.G.L. c. 176D, § 3(5)?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
M.G.L. c. 176D, § 3(5) makes it an unfair practice to knowingly file with the Commissioner, or knowingly permit the filing of, false statements about an insurer's financial condition or false annual statements. The offense runs against the regulator: the Massachusetts Division of Insurance relies on filings to monitor solvency, and misstated financials corrupt that oversight. The requirement is honesty in the filings themselves, which is separate from how the insurer treats complainants, competitors, or claimants.
Why the other options are wrong
- A) Inadequate complaint records are the unfair practice at M.G.L. c. 176D, § 3(10), aimed at consumer-protection recordkeeping.
- B) Derogatory statements about a competitor are defamation under M.G.L. c. 176D, § 3(3), not a filing violation.
- D) Lowball settlement practices belong to the unfair claims settlement catalogue at M.G.L. c. 176D, § 3(9), not the financial-filing prohibition.
Memory hook
False financial statements = lying to the Commissioner on paper — filings must tell the truth.