Trade Practices

Most states have adopted the Unfair Trade Practices Act to protect consumers against unfair or deceptive insurance marketing and claims practices. Certain agent practices are considered illegal and include the following activities:


Allowing differences in rates, premiums, fees, or policy benefits between individuals of the same class or insurance risk based on place of residence, creed or national origin. Some states may also include gender, marital status, place of residency, or other factors in their definition(s).

Borrowing from or Loaning Money to Clients

Agents are prohibited from borrowing money from or lending money to a client or client’s family member.  This also includes depositing client funds into your personal bank account(s).

False or Deceptive Advertising

Creating or using misleading or untrue material to solicit interest in insurance or in a product, company, or agents.  This includes deliberate use or creation of false financial documents regarding the solvency of an insurance company designed with the intent to deceive others.

Misrepresentation in Insurance Applications

Making false or fraudulent statements or representations by an applicant, agent, or other person in or relating to an application for an insurance policy or an annuity contract.  This would include encouraging or knowingly helping another person make such a representation or knowingly attest to it.  Also keep in mind that a material misrepresentation in the application can void the policy contract and may result in commission chargebacks and loss of coverage.

Misrepresentation of an Insurance Policy

Oral or written statements, omissions, presentations, illustrations, estimates, or comparisons made or circulated by an agent, insurers, or other person that don’t truly reflect the facts concerning the terms, benefits, rates, advantages, or conditions of any insurance policy or annuity contract.


An illegal practice in most states. It involves the return of any portion of the agent’s commission to an insured or anything else of value given to an insured as an inducement to buy.

Illegal Premiums or Charges

Charging or collecting any premium or charge not specified in the insurance contract.

Insurance Churning

Replacing a client’s insurance policy with a new policy from the same insurance company to earn a commission, rather than provide better coverage.


Misrepresenting a policy or making incomplete comparisons of policies to induce a policy owner to change or replace an existing insurance policy with a policy from another life insurance company.

Boycott, Coercion or Intimidation

Actions intended to create a monopoly or unreasonably restrain free trade in the business of insurance.


A false, maliciously critical, or derogatory statement intended to injure a person engaged in the insurance business.


Illegally requiring a person to buy another product or service to be eligible to buy insurance—or vice versa.

Examples of Inappropriate Actions

  • “Bashing competitors” through disparaging remarks about other insurance companies, MGA’s, products, agents or producers
  • Unfairly or incompletely compare companies, agents, producers, products, or insurance company ratings
  • Misrepresent company ratings and financial statements
  • Make untrue statements on an insurance application