State RegulationsVA specificDifficulty 2/5
Several Virginia agencies agree among themselves that none will place business with a newly formed insurer unless it raises its commission levels, in order to pressure the new insurer out of competing aggressively. Which unfair trade practice is this?
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 B is correct
Va. Code § 38.2-510 prohibits an agreement among persons in the insurance business to boycott, coerce, or intimidate — for example, conspiring to withhold business to force a competitor to change its conduct. The collective refusal described in the stem is the classic boycott, which the Virginia Bureau of Insurance treats as an unfair method of competition regardless of how the participants frame it commercially.
Why the other options are wrong
- A) Misrepresentation is a false statement about policy terms or financial condition; the stem involves coordinated pressure, not false statements.
- C) Twisting is inducing surrender of an existing policy through misrepresentation; no policy replacement is involved.
- D) Unfair discrimination concerns differential treatment of similarly situated applicants; the misconduct here is collective coercion of a competitor.
Memory hook
Ganging up to squeeze a competitor is a boycott, not negotiation.