Property and Casualty Insurance Practice Exam

What is twisting in the context of insurance?

1. A method of saving costs on premiums

2. Convincing a client to cancel existing insurance to buy a different policy

3. A process for updating policy details

4. An authorized tactic for client retention

The correct answer is: Convincing a client to cancel existing insurance to buy a different policy

Twisting refers to the practice of persuading a policyholder to cancel their existing insurance policy and purchase a new one from a different insurer, often based on misleading or inaccurate information. This behavior is considered unethical and can be detrimental to the client, as they may be lured into switching policies without fully understanding the implications, benefits, or coverage differences. In this context, twisting typically aims to benefit the agent or broker by earning commissions on the new policy, rather than genuinely serving the client's best interests. This practice is monitored and restricted by regulatory bodies to protect consumers from potential fraud or misrepresentation. The other options do not align with the definition of twisting. For instance, saving costs on premiums is a legitimate concern for policyholders but is not related to the act of twisting. Updating policy details is a regular part of insurance management and does not imply manipulating clients. Lastly, any authorized tactic for client retention would not involve unethical practices like twisting.