A Massachusetts producer distributes flyers asserting that a competing insurer 'is insolvent and will never pay its claims,' although the producer knows the competitor is financially sound. Which unfair trade practice has the producer committed?

Why A is correct

M.G.L. c. 176D, § 3(3) makes it an unfair practice to circulate maliciously critical or derogatory statements about an insurer's financial condition that are calculated to injure the insurer. The producer's false insolvency claim is exactly that: a derogatory statement about a competitor's financial condition, made with knowledge of its falsity and intended to draw business away. The Massachusetts Division of Insurance disciplines producers for this conduct, and the injured insurer may also have recourse for the damage to its reputation.

Why the other options are wrong

• B) False advertising under M.G.L. c. 176D, § 3(2) concerns misleading statements designed to sell the advertiser's own coverage, not attacks on a competitor's solvency.
• C) False financial statements under M.G.L. c. 176D, § 3(5) concern an insurer's own false filings with the Commissioner, not flyers about a rival.
• D) Unfair claims settlement practices under M.G.L. c. 176D, § 3(9) govern how an insurer handles the claims presented to it, not what a producer prints about a competitor.

Memory hook

Spreading 'they're insolvent' lies is defamation — financial smears against a competitor.