Key Takeaways
- New Hampshire has adopted the Unfair Insurance Trade Practices Act under RSA 417
- Rebating is prohibited under New Hampshire law with limited exceptions
- Twisting and churning are prohibited replacement practices
- The Insurance Commissioner has enforcement authority
- Insurers must handle claims fairly and promptly
Unfair Trade Practices
New Hampshire has adopted comprehensive unfair trade practices regulations under RSA 417 (Unfair Insurance Trade Practices).
Unfair Insurance Trade Practices Act
New Hampshire prohibits various unfair or deceptive practices in the insurance industry.
Misrepresentation
Producers and insurers are prohibited from:
- 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
New Hampshire 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
Rebating
Rebating is offering inducements not specified in the policy to purchase insurance:
What Is Prohibited
- 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
New Hampshire allows:
- Dividends specified in policy
- Legitimate marketing items of nominal value
- Group premium discounts
- Premium financing arrangements
Exam Tip: Rebating is generally prohibited in New Hampshire. Remember the limited exceptions for dividends and nominal value items.
Twisting and Churning
Twisting
Twisting is misrepresenting the terms of an existing policy to induce replacement:
- Falsely claiming existing policy is worthless
- Misrepresenting surrender values
- Hiding costs of replacement
- Exaggerating benefits of new policy
Churning
Churning is excessive replacement to generate commissions:
- Multiple replacements for same client
- Pattern of replacements in producer's book
- Ignoring client's best interests
- Creating new surrender charge periods
Penalties for Twisting and Churning
| Violation | Potential Penalty |
|---|---|
| First offense | Warning, fine, or suspension |
| Repeat offense | License revocation |
| Consumer harm | Restitution required |
Claims Handling Requirements
New Hampshire has guidelines for fair claims handling:
Required Practices
Insurers must:
- Acknowledge claims with reasonable promptness
- Act reasonably promptly on communications
- Adopt reasonable standards for prompt investigation
- Attempt in good faith to settle claims where liability is clear
Prohibited Practices
Insurers cannot:
- Misrepresent policy provisions to claimants
- Fail to acknowledge claims promptly
- Fail to communicate claim decisions
- Deny claims without reasonable investigation
- Offer substantially less than reasonable value
- Delay payment to force settlement
Unfair Discrimination
New Hampshire 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)
Under which RSA does New Hampshire regulate unfair trade practices?
Which of the following is generally PERMITTED in New Hampshire insurance sales?
What is twisting in New Hampshire insurance law?
What can an insurer NOT do under New Hampshire claims handling rules?