State RegulationsOH specificDifficulty 2/5
A Toledo agent circulates a letter to area policyholders falsely claiming that a competing insurer is insolvent, hoping clients will move their business to him. Under Ohio law this conduct is:
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
ORC 3901.21(C) and (D) prohibit defamation in the business of insurance: making or circulating false or malicious statements about the financial condition of an insurer or person engaged in the business of insurance that are calculated to injure them. A knowingly false insolvency claim aimed at diverting business fits this definition exactly, and the practice is separately actionable under ORC 3999.09's false-statement provisions.
Why the other options are wrong
- B) Rebating requires giving or offering premiums, favors, or valuable consideration not specified in the contract; spreading a false rumor provides no such inducement to the client.
- C) Twisting is a misleading comparison of policy terms made to induce a lapse or surrender; the letter makes no comparison of policy benefits or terms at all.
- D) Unfair discrimination addresses unequal treatment of insurance applicants of the same class; it does not govern false statements about a competitor's financial condition.
Memory hook
Fake insolvency talk = defamation in Ohio.