A candidate asks how federal fraud provisions apply to Pennsylvania insurance professionals. Which statement is accurate?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Federal law, including the fraud and false statements provisions applicable to the business of insurance, named here in words only, reaches conduct such as knowingly making false statements or perpetrating fraud in connection with insurance transactions. Those provisions operate alongside, not instead of, Pennsylvania's own framework: the Insurance Fraud Act at 40 P.S. §§ 325.1-325.62 and the Crimes Code at 18 Pa. C.S. § 4117. A Pennsylvania producer can therefore face both federal and state exposure for the same dishonest conduct, and the Pennsylvania Insurance Department can add licensing discipline under its unfair-practices authority at 40 P.S. § 1171.5.
Why the other options are wrong
- A) Federal and state fraud authority are cumulative, not exclusive; Pennsylvania's Insurance Fraud Act and Crimes Code remain fully in force.
- B) The federal provisions reach individuals who perpetrate fraud in insurance transactions, including producers, not only insurers as entities.
- D) Compliance with state requirements does not immunize anyone from federal law; the two systems apply independently to the same conduct.
Memory hook
Federal and state fraud laws stack, they never swap.