Unfair trade practices I: sliding, coercion, misrepresentation, defamation, false advertising

The unfair trade practices list

Florida's insurance code has a whole part devoted to unfair insurance trade practices. Its core section defines a list of acts that are unfair methods of competition and unfair or deceptive acts or practices. This lesson covers five of them that show up constantly on the exam: misrepresentation, false advertising, defamation, boycott, coercion, and intimidation, and sliding. Notice how often the word knowingly appears in these definitions: the law targets deliberate conduct, not an honest slip.

Misrepresentation

It is an unfair practice to knowingly make or circulate any estimate, illustration, circular, statement, sales presentation, omission, or comparison that:

• misrepresents the benefits, advantages, conditions, or terms of a policy;
• misrepresents dividends or share of surplus to be received, or makes false or misleading statements about dividends previously paid;
• misleads about the financial condition of any person, or about the legal reserve system a life insurer operates on;
• uses a policy name or title that misrepresents its true nature;
• misrepresents a policy to induce its lapse, forfeiture, exchange, conversion, or surrender, or to effect a pledge, assignment, or loan against it;
• presents a policy as shares of stock, or misrepresents ownership interest in the company.

A misleading omission counts, and so does a property and casualty certificate of insurance altered after it was issued.

It is also a misrepresentation to use advertising that would lead a reasonable person to believe the state or the federal government stands behind a person's insurance sales or credit, or guarantees returns on insurance products.

False advertising generally

Separately, it is unfair to knowingly place before the public, in a newspaper or magazine, a notice, circular, pamphlet, letter, or poster, over radio or television, or in any other way, an advertisement or statement about the business of insurance that is untrue, deceptive, or misleading. The medium does not matter; the misleading content does.

Defamation

Defamation is knowingly making or circulating, or aiding or encouraging others to circulate, any oral or written statement or literature that is false or maliciously critical of, or derogatory to, any person and is calculated to injure that person. Running down a competing agent or insurer with false or malicious claims to win a sale is the classic example.

Boycott, coercion, and intimidation

It is unfair to agree to commit, or by concerted action to commit, any act of boycott, coercion, or intimidation that results in, or tends to result in, an unreasonable restraint of, or monopoly in, the business of insurance. The focus is on pressure that shuts down fair competition.

Sliding

Sliding is adding coverage the customer did not knowingly agree to. The standard forms are telling an applicant that an extra coverage is required by law when it is not, telling them it is included in the coverage they asked for when it is not, and charging for extra coverage without the applicant's informed consent. An agent who quietly adds a roadside assistance charge to an auto policy is sliding.

Related duties and enforcement

Knowingly filing or circulating any false material statement, or making a false entry (or omitting a true one) in a book or report, is also an unfair practice. The Department and the Financial Services Commission may adopt rules identifying specific prohibited practices, but those rules cannot enlarge the statute, and they must adopt rules protecting members of the armed forces from dishonest or predatory insurance sales.

Misrepresent, mislead, malign, pressure, or pad the policy, and you have committed an unfair trade practice.