If an insurer or licensed insurance agent uses unfair or deceptive business practices to sell to their clients not only is it unethical but it’s also against the law. When individuals or insurance businesses profit unfairly off of their clients, they violate the Unfair Trade Practices Act and could face legal consequences.
What is the Unfair Trade Practices Act?
First created in the 1940s by the National Association of Insurance Commissioners (NAIC), the Unfair Trade Practices Act is model legislation that helps protect consumers from unethical business practices. While it’s been updated since, the purpose of the act remains the same – to prohibit businesses from using deceptive and unfair means to make a profit when they sell insurance policies.