State RegulationsMI specificDifficulty 2/5
During a sales presentation, a Michigan producer claims that a competitor insurer is about to become insolvent in order to induce the applicant to switch coverage. Which statement is correct?
Select an option to reveal the answer and the full 3-part explanation — free, no signup.
Answer & full 3-part explanation (select an option above, or peek)
Why B is correct
M.C.L. 500.2005 prohibits misrepresenting the financial condition of any person, including another insurer, in connection with insurance solicitation. False or unsubstantiated statements that a competitor is failing are misrepresentation under the Michigan Insurance Code, exposing the producer and insurer to fines, cease-and-desist orders, and license action enforced by the director.
Why the other options are wrong
- A) The producer's personal belief does not legalize a misrepresentation of financial condition; the statute reaches false statements regardless of motive.
- C) Solicitation statements receive no blanket protection; Michigan law expressly prohibits misrepresenting financial condition during solicitation.
- D) The director enforces unfair trade practices on behalf of the public; enforcement does not depend on a private applicant complaint.
Memory hook
Never trash a rival's balance sheet — M.C.L. 500.2005 covers it.