Georgia Property & Casualty Practice Exam

Which action does not constitute an unfair trade or marketing practice?

1. Melanie, whose majority of insurance sales are to her business associates.

2. Chip, who offers a free lunch to prospective customers who attend his insurance seminars.

3. Able Co. and Baker Co., who agree to artificially lower their premiums to reduce competition.

4. Stephanie, who refers all applicants of a particular income level to another producer.

The correct answer is: Chip, who offers a free lunch to prospective customers who attend his insurance seminars.

The action of offering a free lunch to prospective customers who attend insurance seminars is typically seen as a marketing strategy that can enhance business relationships and provide value to potential clients without crossing ethical boundaries. This approach is aimed at attracting customers to learn about the available insurance products, making it a promotional tactic that does not infringe on ethical standards or legal regulations regarding trade practices. In contrast, actions like agreeing to artificially lower premiums to reduce competition directly violate principles of fair competition and can harm the market. Referring all applicants of a certain income level to another producer can create ethical concerns regarding discriminatory practices. Similarly, leveraging business relationships primarily to sell insurance raises questions about the integrity of the sales approach. Therefore, the offer of a free lunch in a seminar setting stands out as a legitimate promotional effort rather than an unfair trade practice.