Key Takeaways
- Mississippi prohibits misrepresentation, false advertising, and unfair claims practices under Title 83
- Rebating is prohibited under Mississippi regulations with limited exceptions
- Twisting (prohibition of twisting insurance products) is specifically regulated
- Mississippi has not adopted the Unfair Claims Settlement Practices Act but has unfair trade practice prohibitions
- Insurers must handle claims fairly and in reasonable timeframes
Unfair Trade Practices
Mississippi Insurance Code (Title 83) prohibits various unfair or deceptive practices in the insurance industry under Section 83-5-33 and 83-5-35.
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 the nature of the insurance transaction
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 and do change |
| "This company is the largest" | If not true, it's false |
| "You must buy today" | False urgency |
False Advertising
Mississippi prohibits deceptive insurance advertising:
- Ads must be truthful and not misleading
- Must clearly identify as insurance advertisement
- Cannot use testimonials that are not genuine
- Cannot imply government endorsement
- Must include insurer's name
Social Media Rules
- Same standards apply to social media
- Must be clear it's an advertisement
- Cannot make claims that cannot be substantiated
- Producer must be identified
Rebating
Rebating is offering inducements not specified in the policy to purchase insurance:
What Is Prohibited
Mississippi regulation (19 Miss. Admin. Code, Part 1, Chapter 2) specifically addresses rebating:
- Returning part of premium to insured
- Offering gifts or prizes of significant value
- Paying for referrals to individuals
- Sharing commission with non-licensed persons
Limited Exceptions
Mississippi allows:
- Dividends specified in policy
- Legitimate marketing items of nominal value
- Group premium discounts
- Premium financing arrangements
Exam Tip: Rebating is generally prohibited in Mississippi. Remember the limited exceptions for dividends and nominal value items.
Twisting
Mississippi has specific regulations prohibiting twisting under 19 Miss. Admin. Code, Part 1, Chapter 1.
Definition
Twisting occurs when an agent persuades a policyholder to change policies to generate higher first-year commissions:
- Making misrepresentations to induce replacement
- Falsely claiming existing policy is worthless
- Misrepresenting surrender values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Penalties for Twisting
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine, or suspension |
| Repeat offense | License revocation |
| Consumer harm | Restitution required |
Churning
Churning is excessive replacement of policies to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in book of business
- Ignoring client's best interests
- Creating new surrender charge periods
Claims Handling Requirements
Mississippi has guidelines for fair claims handling under Miss. Code Ann. Section 83-9-5:
Required Practices
Insurers must:
- Furnish forms to claimant within 15 days of receiving notice of claim
- Pay clean electronic claims within 25 days after receipt of proof of loss
- Pay clean paper claims within 35 days after receipt of proof of loss
- Notify provider of reasons for non-payment within required timeframes
Non-Clean Claims
For claims that are not clean:
- Notify provider/insured of reasons within 25 days (electronic)
- Notify within 35 days (paper)
- Pay resubmitted claims within 20 days after receipt
Bad Faith
Mississippi allows first-party claimants to sue insurers for bad faith:
- Must prove insurer lacked arguable or legitimate basis for denial
- Or acted with gross and reckless disregard for insured's rights
- Unreasonable delay in payment may be actionable
Exam Tip: While Mississippi has not adopted the NAIC Unfair Claims Settlement Practices Act, it has its own unfair trade practice prohibitions and claims handling guidelines.
Unfair Discrimination
Mississippi prohibits unfair discrimination in insurance:
Prohibited Practices
| Practice | Prohibition |
|---|---|
| Race | Cannot discriminate based on race |
| Religion | Cannot discriminate based on religion |
| National Origin | Cannot discriminate based on national origin |
| Disability | Cannot discriminate based on disability (with limitations) |
What IS Permitted
Risk-based underwriting using:
- Age
- Health history
- Claims history
- Occupation
- Lifestyle factors (smoking, hazardous activities)
Which of the following is generally PERMITTED in Mississippi insurance sales?
Within how many days must Mississippi insurers furnish claim forms to claimants?
What is twisting in Mississippi insurance law?
Can Mississippi policyholders sue insurers for bad faith claims handling?