State RegulationsTN specificDifficulty 2/5
An insurer mails circulars to producers falsely asserting that a competing insurer is insolvent. Under Tennessee insurance law, how is this conduct classified?
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Answer & full 3-part explanation (select an option above, or peek)
Why A is correct
T.C.A. § 56-8-104's defamation provision makes it an unfair trade practice to circulate false or maliciously critical statements about the financial condition of an insurer calculated to injure the competitor. False insolvency circulars are a textbook case, and the Tennessee Department of Commerce & Insurance may discipline the insurer and its producers for circulating them.
Why the other options are wrong
- B) A comparison built on a false insolvency claim is not permissible; truthfulness is what separates lawful comparison from defamation.
- C) Twisting targets a policyowner's existing policy, not a competitor's reputation among producers.
- D) Unfair claim settlement practices concern the handling of claims, and no claim is being handled in this scenario.
Memory hook
False 'they're broke' circulars = defamation, whatever the mailing list.