What is an unfair trade practice in insurance?

An unfair trade practice in insurance is characterized by actions that are deceptive or misleading and can harm consumers or the integrity of the insurance market. Offering overvalued prizes to induce purchases is considered an unfair trade practice because it manipulates consumer behavior under false pretenses. When an insurance company promises unrealistic or exaggerated prizes as incentives to purchase a policy, it can lead to customers making decisions based on misleading information rather than the actual value or quality of the insurance product.

This practice undermines fair competition and can create an uneven playing field in the market, as it encourages companies to prioritize gimmicks over providing genuine value to their customers. It also raises ethical concerns, as it can exploit consumer trust and perceptions. In contrast, practices like providing free consultations, discounting premiums, or bundling policies generally align with fair trade principles as they enhance consumer choice and accessibility.