All of the following are considered unfair trade practices in the business of insurance EXCEPT?

All of the following are considered unfair trade practices in the business of insurance EXCEPT?

• A. Sharing commissions
• B. Boycott
• C. Rebating
• D. Defamation

Answer: (A)

Sharing commissions is permissible under certain conditions in the insurance industry and does not typically fall under unfair trade practices. This practice often involves situations where agents or brokers can collaborate and share commissions when one agent refers a client to another or when they work on a joint policy. As long as it is done transparently and within the legal framework set by regulatory bodies, sharing commissions is accepted. In contrast, practices like boycott, rebating, and defamation are considered unfair trade practices. A boycott involves an agreement among competitors to refuse to deal with a particular party, which can manipulate market dynamics unfairly. Rebating includes offering policyholders a portion of the commission as an incentive, which can distort competition by creating inequality among agents. Defamation refers to the act of making false statements about competitors, damaging their reputation and market presence. These practices undermine fair competition and are thus prohibited in the insurance business.

Sharing commissions is permissible under certain conditions in the insurance industry and does not typically fall under unfair trade practices. This practice often involves situations where agents or brokers can collaborate and share commissions when one agent refers a client to another or when they work on a joint policy. As long as it is done transparently and within the legal framework set by regulatory bodies, sharing commissions is accepted.

In contrast, practices like boycott, rebating, and defamation are considered unfair trade practices. A boycott involves an agreement among competitors to refuse to deal with a particular party, which can manipulate market dynamics unfairly. Rebating includes offering policyholders a portion of the commission as an incentive, which can distort competition by creating inequality among agents. Defamation refers to the act of making false statements about competitors, damaging their reputation and market presence. These practices undermine fair competition and are thus prohibited in the insurance business.