Which term describes the illegal practice of inducing a client to switch to another producer or insurer for the purpose of earning new business?

Which term describes the illegal practice of inducing a client to switch to another producer or insurer for the purpose of earning new business?

• A. Twisting
• B. Misrepresentation
• C. False Advertising
• D. Defamation

Answer: (A)

Twisting is the illegal practice of inducing a client to switch to another producer or insurer for the purpose of earning new business. It happens when an agent pressures or misleads a policyholder into canceling their current policy and buying from the agent’s company mainly to generate a commission, not to benefit the client. This harms the client by potentially reducing coverage, increasing costs, or creating gaps in protection, and it violates insurance ethics and regulations. Other terms describe related issues but not the same misconduct: misrepresentation involves giving false information about a policy or insurer; false advertising covers deceptive marketing claims; defamation involves making false statements that harm someone’s reputation. The key idea here is the deliberate switch to chase new business, which is why twisting is the correct term.

Twisting is the illegal practice of inducing a client to switch to another producer or insurer for the purpose of earning new business. It happens when an agent pressures or misleads a policyholder into canceling their current policy and buying from the agent’s company mainly to generate a commission, not to benefit the client. This harms the client by potentially reducing coverage, increasing costs, or creating gaps in protection, and it violates insurance ethics and regulations. Other terms describe related issues but not the same misconduct: misrepresentation involves giving false information about a policy or insurer; false advertising covers deceptive marketing claims; defamation involves making false statements that harm someone’s reputation. The key idea here is the deliberate switch to chase new business, which is why twisting is the correct term.