When you hear a negative rumor about a life insurer’s financial health, what do you do?

A. Try to confirm it using credible sources of information.
B. Keep your clients informed about legitimate threats to a company’s solvency.
C. Research financially stronger companies who provide comparable products.
D. Launch an immediate campaign to roll all of your clients into policies with another carrier.

If your answer was D, watch out. You’ll be in hot water in most states. Case in point: A recent bulletin from Susan E. Voss, Iowa’s Insurance Commissioner, reminds agents not to use rumors to generate replacement sales.

According to the Iowa bulletin, state regulations “expressly prohibit insurers and insurance producers from making statements that disparage other insurers or are derogatory to the financial condition of any insurer. Such practices are considered unfair or deceptive acts or practices.”

In addition, Iowa regulations prohibit “insurers and producers from employing any method of marketing or tactic which uses undue pressure, force, fright, threat, whether explicit or implied, to solicit the purchase of insurance.”

The Iowa bulletin also reminds producers of state replacement rules, which require them to have reasonable grounds for recommending a replacement and to make sure the replacing product is suitable for the client.