Key Takeaways
- Georgia Title 33 Chapter 6 prohibits unfair trade practices including misrepresentation and false advertising
- Rebating is prohibited in Georgia, with limited exceptions for legitimate discounts
- Twisting and churning are prohibited practices subject to license revocation and fines
- Insurers must handle claims fairly and in good faith within specified timeframes
- Unfair discrimination based on race, color, religion, sex, or national origin is prohibited
Unfair Trade Practices
Georgia's Title 33, Chapter 6 (Unfair Trade Practices) prohibits various unfair or deceptive practices in the insurance industry.
Misrepresentation
Producers and insurers are prohibited from:
False Statements
- Making false statements about policy terms or benefits
- Misrepresenting the financial condition of an insurer
- Using misleading policy illustrations
- Making false statements about competitors
- Misrepresenting dividends or share of surplus
Examples of Misrepresentation
| Prohibited Statement | Why It's Misrepresentation |
|---|---|
| "This policy covers everything" | No policy covers all losses |
| "Your rates will never increase" | Rates can change |
| "This company is the safest" | Unverifiable claim |
| "You must buy today" | False urgency |
False Advertising
Georgia prohibits deceptive insurance advertising:
- Ads must be truthful and not misleading
- Must clearly identify as insurance advertisement
- Cannot use fake testimonials
- Cannot imply government endorsement
- Must include insurer's name
- Cannot use deceptive titles or names
Social Media and Internet
- Same standards apply to all media
- Must clearly identify as advertisement
- Cannot make unsubstantiated claims
- Producer/insurer must be identified
Rebating
Rebating is offering inducements not specified in the policy to purchase insurance:
What Is Prohibited
- Returning part of premium to insured
- Offering gifts of substantial value
- Paying for referrals to individuals
- Sharing commission with non-licensed persons
- Offering special favors or advantages
What IS Permitted
Georgia allows:
- Dividends specified in policy
- Experience rating refunds
- Legitimate marketing items of nominal value
- Group premium discounts
Exam Tip: Rebating is prohibited in Georgia. Remember that nominal value promotional items (pens, calendars) are permitted.
Twisting and Churning
Twisting
Making misrepresentations to induce replacement of existing insurance:
- Falsely claiming existing policy has no value
- Misrepresenting surrender values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Churning
Excessive replacement of policies to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in book of business
- Ignoring client's best interests
- Not disclosing surrender charges
Penalties
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine, or suspension |
| Repeat offense | License revocation |
| Per violation | Up to $10,000 fine |
| Consumer harm | Restitution required |
Unfair Claims Practices
Georgia requires insurers to handle claims fairly and promptly:
Prohibited Practices
- Misrepresenting policy provisions to claimants
- Failing to acknowledge claims promptly
- Failing to communicate claim decisions
- Denying claims without reasonable investigation
- Offering substantially less than reasonable value
- Delaying payment to force lower settlement
- Requiring excessive documentation
Claim Handling Timeframes
| Action | Timeframe |
|---|---|
| Acknowledge claim | Within 15 days |
| Accept or deny claim | Within 15 days of receiving all information |
| Pay claim | Promptly after agreement |
| Provide reasons for denial | In writing |
Bad Faith
If an insurer acts in bad faith, policyholders may recover:
- Policy benefits owed
- Penalty of up to 50% of claim amount
- Attorney's fees
- Additional damages in some cases
Unfair Discrimination
Georgia prohibits unfair discrimination in insurance:
Prohibited Bases
| Protected Class | Description |
|---|---|
| Race | Cannot use race in underwriting |
| Color | Full protection |
| Religion | Cannot discriminate |
| Sex | Limited restrictions |
| National Origin | Cannot discriminate |
| Disability | ADA protections apply |
What IS Permitted
Risk-based underwriting using:
- Age
- Health history and conditions
- Claims history
- Occupation (with limitations)
- Lifestyle factors (smoking, hazardous activities)
- Geographic location
Which of the following is generally PERMITTED in Georgia insurance sales?
What is the maximum fine per violation for unfair trade practices in Georgia?