Washington Life Producer Practice Exam

Under the McCarran-Ferguson Act, what is the minimum penalty for a producer who obtains personal information about a client without a legitimate reason?

1. $1,000

2. $5,000

3. $10,000

4. $20,000

The correct answer is: $10,000

The minimum penalty of $10,000 for a producer who improperly obtains personal information about a client without a legitimate reason under the McCarran-Ferguson Act is rooted in the act's intention to regulate the insurance industry while protecting consumers' rights. The McCarran-Ferguson Act grants states the authority to regulate insurance but also establishes guidelines to safeguard consumer information. This specific penalty serves as a deterrent against unauthorized access to sensitive personal data, emphasizing the importance of ethical conduct in the insurance field. The higher penalty reflects the serious nature of breaches of privacy, acknowledging that violations can have significant implications for clients, including financial harm or identity theft. As states enforce this provision, it ultimately aims to maintain public trust in insurance practices by ensuring that producers handle client information responsibly and only with legitimate purposes. Thus, the $10,000 minimum penalty aligns with the act's protective measures toward consumer privacy.