Which action constitutes defamation in the insurance industry?

Spreading rumors about a competitor's financials is considered defamation in the insurance industry because it involves making false statements that can harm the reputation of the competitor. Defamation occurs when an untrue statement is made publicly, leading to damage to someone's reputation. In this context, if an insurer publicly disseminates unfounded claims regarding another insurer's financial health, it can mislead potential clients and affect the competitor's business adversely.

Other options do not constitute defamation as they either pertain to business practices or regulatory compliance aspects rather than making harmful false statements about another entity. Failing to disclose a policy's benefits is typically a compliance issue, raising premiums without notice relates to business practices and customer communication, while advertising non-existent policies involves misleading advertising rather than defamation.