State RegulationsNC specificDifficulty 1/5
Which conduct by a licensed North Carolina producer would violate the ethical standards rule?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
The producer ethical standards rule, 11 NCAC 4 .0423, requires honesty, fair dealing, and accurate presentation of policy information in every insurance transaction. Knowingly making a misleading comparison of benefits to induce a sale misrepresents material facts and is unethical conduct subjecting the producer to disciplinary action by the Commissioner. Keeping records, disclosing replacement, and matching recommendations to client needs are the kinds of conduct the rule expects, not violations.
Why the other options are wrong
- A: Keeping complete records of insurance transactions is a core professional obligation, not a violation of the ethical standards rule.
- B: Disclosing that an application will replace existing coverage fulfills the producer's replacement and disclosure duties (see 11 NCAC 12 .0605) and is ethically required.
- C: Recommending coverage that fits the client's stated needs and budget is ethical conduct — client-appropriate recommendations are exactly what the rule demands.
Memory hook
Ethics rule: compare honestly or don't compare.