State RegulationsNY specificDifficulty 2/5
A licensed agent in Rochester tells a client that a competing insurer is 'on the verge of insolvency,' even though the agent knows the company is financially sound. Under N.Y. Ins. Law §2604, this conduct is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
Under N.Y. Ins. Law §2604, it is a prohibited practice to make, publish, or circulate false statements about the financial condition of an insurer, or statements calculated to injure any person engaged in the insurance business. The rule protects consumers from being frightened out of sound coverage by self-serving falsehoods.
Why the other options are wrong
- B) Comment on a rival's finances is not free of regulation when the statements are knowingly false and injurious; §2604 squarely prohibits them.
- C) Misrepresentation under §2123 concerns false statements about policy terms or benefits, not attacks on a competitor's solvency.
- D) Unfair discrimination under §§2606 through 2608 concerns unfair distinctions among insureds or applicants, not statements about insurers.
Memory hook
False rumor about a rival's solvency = defamation under §2604.