What is twisting in the context of insurance?

Twisting refers to an unfair trade practice in the insurance industry where an agent persuades a policyholder to replace their existing insurance policy with a new one from a different insurer, often with misleading or false information. This practice is deemed unethical because it typically involves the agent focusing on the potential benefits of the new policy while downplaying or omitting the drawbacks of canceling the existing policy. As a result, it can lead to the insured having less coverage or incurring unnecessary costs.

In the context of insurance regulations, twisting is prohibited because it undermines the trust that consumers place in their agents and can result in significant financial harm to policyholders who may not be adequately informed about the implications of switching policies. Therefore, recognizing twisting as an unfair trade practice is crucial in protecting consumers and ensuring ethical standards within the insurance industry.

Other choices, including accepted practice, marketing strategy, or a type of bait and switch, do not accurately describe twisting, as they do not encompass the deceptive and coercive nature of this behavior.