State RegulationsNY specificDifficulty 2/5
At a community seminar, an agent falsely tells attendees that a competing life insurer is about to be liquidated. Under N.Y. Ins. Law §2122, this statement is:
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 C is correct
Under N.Y. Ins. Law §2122, false or misleading statements about the financial condition of an insurer — including circulating rumors that an insurer is impaired or about to be liquidated — are unfair methods of competition and deceptive acts. The rule protects both consumers and honest competition, and the Superintendent of Financial Services may impose penalties for violations regardless of how the statement was communicated.
Why the other options are wrong
- A) The prohibition applies to any communication used in the competition for insurance business, not only written advertisements.
- B) Sincere belief in a false rumor is no defense; the statement's falsity and its deceptive effect on consumers control.
- D) Enforcement does not depend on a competitor's complaint — the Superintendent may act on the unfair practice directly.
Memory hook
False rumors about a rival's finances are an unfair trade practice under §2122.