Arkansas Life and Health Insurance Practice Exam

When Luke's company initiated a policy of refusing to insure buildings over 50 years old on the basis that all such buildings were by definition 'high risk', dissatisfied consumers brought a complaint accusing them of:

1. Fair Competition

2. Fair Marketing

3. Unfair discrimination

4. Unfair Inducement

The correct answer is: Fair Competition

In this scenario, when Luke's company decided to refuse to insure buildings over 50 years old under the assumption that all such buildings are automatically high risk, it is engaging in unfair discrimination. This is because the company is making a blanket decision based solely on the age of the building, which is considered discriminatory as it unfairly targets a specific group of individuals without valid reasoning or individual assessment. Fair Competition (Option A) generally relates to companies operating within legal boundaries and not engaging in anticompetitive practices. Fair Marketing (Option B) refers to the ethical promotion and advertising of products or services. Unfair Inducement (Option D) involves persuading someone to purchase insurance through deception or misrepresentation. None of these options accurately describe the situation presented in the question.