State RegulationsNY specificDifficulty 2/5
A New York insurer learns that one of its agents is paying cash inducements to long-term care applicants and continues doing business with him unchanged. Under N.Y. Ins. Law §2324:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under N.Y. Ins. Law §2324, an insurer or agent that knowingly pays - or knowingly stands behind someone who pays - unlawful inducements is liable as well. The rule prevents insurers from profiting from their agents' rebating while pleading ignorance: once the insurer knows what its agent is doing, continued tolerance makes the violation the insurer's too. Rebating enforcement runs against everyone in the chain who knows.
Why the other options are wrong
- A) Personal payment by the agent does not insulate the insurer; knowing toleration of the practice creates shared liability.
- B) Liability does not wait for a consumer complaint; the knowing payment or toleration itself completes the violation.
- D) The violation is not confined to transactions that ended in issued policies; it attaches to the knowing conduct itself.
Memory hook
Know about the rebates, own the rebates.