Understanding Life Insurance Code Violations And Their Impact

A life insurance code violation is an unfair method of competition or an unfair or deceptive act or practice in the business of insurance. Such violations include misrepresentation and false advertising of policies, false or deceptive advertising of insurance or status as an insurer, and unfair discrimination.

Unfair methods of competition and unfair or deceptive acts or practices prohibited

Unfair methods of competition and unfair or deceptive acts or practices are prohibited in the business of insurance. This includes:

• Misrepresentation and false advertising of insurance policies
• False information and advertising
• Defamation
• Boycott, coercion and intimidation
• False financial statements
• Unfair claim settlement practices
• Failure to maintain complaint handling procedures
• Misrepresentation in insurance applications
• Unfair discrimination
• Rebates
• Unfair settlement practices
• Misrepresentation of insurance policy

Unfair acts and practices: Disclosure of nonpublic personal information in a manner contrary to federal law; regulations

Unfair acts and practices include the disclosure of nonpublic personal information in a manner contrary to federal law. The Gramm-Leach-Bliley Act (GLBA) is a federal law that protects the privacy and security of consumers' personal information. It requires financial institutions, including insurance companies, to explain their information-sharing practices to consumers and to safeguard sensitive data.

The GLBA prohibits insurance companies from disclosing nonpublic personal information to non-affiliated third parties unless they provide consumers with a notice of their information-sharing practices and consumers are given the opportunity to opt out of having their information shared with non-affiliated third parties.

The GLBA also requires insurance companies to implement a comprehensive written information security program that includes administrative, technical, and physical safeguards for the protection of customer information. The program should be designed to:

• Ensure the security and confidentiality of customer information
• Protect against any anticipated threats or hazards to the security or integrity of such information
• Protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer

Unfair or deceptive methods, acts or practices: Offering or selling policy of travel insurance that could never result in payment of claim; marketing blanket travel insurance as free

Offering or selling a policy of travel insurance that could never result in payment of any claims for any insured under the policy

In the business of insurance, it is considered an unfair method of competition and an unfair or deceptive act or practice to offer or sell a policy of travel insurance that could never result in payment of any claims for any insured under the policy. This is a violation of the insurance code and is prohibited.

Marketing blanket travel insurance as free

In the business of insurance, it is considered an unfair method of competition and an unfair or deceptive act or practice to market blanket travel insurance as free. This is a violation of the insurance code and is prohibited.

Misrepresentation and false or misleading advertising of policies prohibited

Misrepresentation and false or misleading advertising of policies are prohibited. This includes making, issuing, or circulating any estimate, illustration, circular, or statement that misrepresents the benefits, advantages, conditions, or terms of any insurance policy. It also includes making any false or misleading statements regarding the dividends or share of surplus previously paid on any insurance policy.

Additionally, it is prohibited to make misleading representations or misrepresentations regarding the financial condition of an insurer or the legal reserve system on which a life insurer operates. Using any name or title that misrepresents the true nature of an insurance policy is also prohibited.

Engaging in misrepresentation and false or misleading advertising of policies may result in denied claims, policy cancellation, and even criminal charges for insurance fraud. It is essential to provide accurate information to avoid such consequences.

False, deceptive or misleading information and advertising prohibited

False, deceptive or misleading information and advertising is prohibited in the business of insurance. This includes making, publishing, disseminating, circulating, or placing before the public any advertisement, announcement, or statement that contains any assertion, representation, or statement with respect to the business of insurance or with respect to any person in the conduct of their insurance business that is untrue, deceptive, or misleading.

In the United States, the National Association of Insurance Commissioners (NAIC) is the U.S. standard-setting and regulatory support organization created and governed by the chief insurance regulators from the 50 states, the District of Columbia, and five U.S. territories. The NAIC provides expertise, data, and analysis for insurance commissioners to effectively regulate the industry and protect consumers. The NAIC also provides members and partners with excellent service and support through effective leadership.

The NAIC's Life Insurance and Annuities (A) Committee is responsible for issues relating to individual and group life insurance, annuities, credit life and disability insurance, reinsurance, actuarial matters, and pension issues. The A Committee also works closely with the Life Actuarial (A) Task Force.

The NAIC's Life Insurance and Annuities (A) Committee has developed a model regulation to address unfair trade practices in the business of life insurance and annuities. The model regulation is intended to provide a framework for the regulation of trade practices in the business of life insurance and annuities. The model regulation is not intended to address unfair claims settlement practices.

Frequently asked questions