Unfair Trade Practice–the following Unfair Trade Practice laws contain more information affecting practices that at this time prohibited in the state of Louisiana.
Misrepresentations and False Advertising of Insurance Policies
Issuing, circulating, or causing to be made any illustration, statement, circular, sales representation, statement or comparison that does any of the following:
- Misrepresenting the benefits of a policy that has been issued
- Misrepresenting the dividends or sharing of the moneys to be received on any policy
- Making a false, misleading statement about dividends or sharing of moneys previously paid on similar policies
- Misrepresenting to policy holders insured by any insurance company of the purpose of enticing the policy holder to lapse, forfeit, or surrender his or her insurance
- Using names or titles of any policy misrepresenting the true nature of it
- Misrepresentation for the purpose of effecting an assignment or effecting a loan against any policy
- Misrepresenting policies as being shares of stock
Misrepresentation in Insurance Applications–it is illegal to make untrue statements on or about policy applications for profit.
False Financial Statements–it is illegal to make false entry, or omit a material fact, in all reports or statement of an insurance company intending to deceive public officials to whom the insurance company is required to report.
Stock Operations and Advisory Board Contracts–no person may give stocks or other instruments to entice a client to purchase insurance.
Unfair Discrimination–insurance companies may not discriminate between persons of the same underwriting class. Insurance companies also may not discriminate between persons of the same class because of:
- Geographic location of the risk
- Age of the residential property
- Bankruptcy filing
- Another insurance company refused to insure
Note: Consideration may be given to the nature of the risk, plan of insurance, the expected expense of conducting the business, or any other factor.
Insurance companies may not refuse to insure or limit the amount of coverage to a client solely based on sex, marital status, race, religion, or nationality.
Note: Marital status may be considered when defining persons eligible for dependent benefits, and physical or mental impairments may only be considered when based on actuarial principles and experience.
Defamation – making a false, malicious, or derogatory public statement about another insurance company in order to intentionally injure it. Defamation may be an oral or written statement. It is illegal to defame someone directly or indirectly.
Rebating – offering anything of value to get a client to buy insurance from you. Examples are as follows:
- Offering a client LSU football tickets to buy a policy
- Offering a client part of your commission to buy a policy
- Offering a client their first month’s premium back to buy a policy
- Offering a client stock in the company to buy a policy
Producers can buy their clients a meal, give them a calendar, or give them a ball point pen with the company logo but cannot offer the clients anything of value to entice them to purchase insurance.
Coercion–forcing someone to purchase an insurance policy, e.g. a bank cannot force a client to buy an insurance policy because it has approved a person for a home loan.
Discrimination and Rebate Provisions Exceptions–there are certain types of payment and adjustments which are not considered to be illegal rebating or discrimination. Examples are as follows:
- Paying bonuses to policy holders from non participating insurance companies
- Debit life insurance policyholders who have paid premiums continuously to an insurance company’s office, thereby making an allowance for the savings in collection of premiums.
- Changing the rate of a premium for a group policy based on loss or expense experience, retroactive only for that policy year
- Agents, excepting on their own responsibility, payment of the first premium
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