California Property & Casualty Broker-AgentCalifornia LawMedium
A California insurance producer is found to have engaged in 'twisting.' Which of the following best describes this unfair trade practice?
- ACharging excessive premiums for a policy without proper actuarial justification.
- BRefusing to pay a claim without conducting a reasonable investigation.
- CMaking false or misleading statements about an insurer's financial condition.
- DInducing an insured to lapse, forfeit, or surrender an existing policy to replace it with a new one through misrepresentation.
Show answer & explanationAnswer & explanation
Correct answer: D. Inducing an insured to lapse, forfeit, or surrender an existing policy to replace it with a new one through misrepresentation.
Twisting is a specific unfair trade practice defined in the California Insurance Code as inducing an insured to terminate an existing policy and replace it with another, to the insured's detriment, through misrepresentation or incomplete comparison.
Why the other options are wrong
- A. This relates to unfair rating practices, not twisting.
- B. This is an unfair claims practice, not twisting.
- C. This describes defamation or misrepresentation, but not specifically twisting.
Twisting
An illegal practice where a producer induces an insured to lapse or surrender an existing policy to purchase a new one, through misrepresentation or incomplete comparison, often to the insured's detriment.
- Involves policy replacement.
- Requires misrepresentation or incomplete comparison.
- Aims to benefit the producer (e.g., new commission) at the insured's expense.
- An unfair trade practice prohibited by law.
Memory trick: Twisting words, twisting policies, all for bad purposes.