Question 58

Making an incomplete comparison of policies to convince a policyholder to cancel and change to a different policy

Twisting is specifically characterized by persuading a policyholder to abandon their current insurance policy for another by using misleading or incomplete information about the policies being compared. This practice can lead to the policyholder making decisions that are not in their best interest.

A) Intimidating a person into buying a policy

While intimidation may be deemed an unethical practice, it does not fit the definition of twisting, which revolves around misleading comparisons and not coercion. This option describes a different type of unfair trade practice that does not specifically involve the manipulation of policy comparisons.

B) Making an incomplete comparison of policies to convince a policyholder to cancel and change to a different policy

This option accurately describes twisting as it involves misleading a policyholder through incomplete information about different insurance policies to induce them to switch. Such practices can lead to financial detriment for the policyholder, aligning perfectly with the definition of twisting.

C) Misrepresenting the contract terms during a claims settlement

Misrepresentation during claims settlement pertains to the handling of claims rather than the initial sale or comparison of insurance policies. While it is an unfair trade practice, it does not illustrate twisting, which focuses on persuading a policyholder to change their existing insurance.

D) Giving special favors as an inducement to purchase insurance

This option describes inducement, which can be another form of unethical practice in insurance but does not relate to twisting. Twisting specifically involves the act of misleading a policyholder regarding policy comparisons rather than providing incentives.

Conclusion

Option B is the definitive example of twisting as it directly involves misleading policy comparisons to persuade a policyholder to change their insurance. The other options, while they represent unethical practices, do not capture the essence of twisting, which is centered on providing incomplete or misleading information to influence policyholder decisions.