What is a consequence of the practice of twisting in insurance?

Twisting in insurance refers to the unethical practice of persuading a policyholder to drop their existing insurance policy in favor of a new one that may not necessarily provide better coverage or advantages. This practice is generally motivated by the desire of agents or brokers to gain commissions from the sale of new policies.

The consequence of twisting is primarily the potential for administrative penalties. Regulatory bodies oversee insurance practices to protect consumers and ensure fair business operations. When an insurance agent engages in twisting, they may face disciplinary actions, including fines, suspension, or revocation of their insurance license. These penalties are meant to deter such unethical practices and uphold the integrity of the insurance industry.

Improved customer satisfaction, lesser regulatory scrutiny, and increased sales are not typical consequences of twisting. In fact, twisting often leads to negative consumer experiences, increased scrutiny from regulators, and can undermine trust, ultimately harming sales in the long run.