State RegulationsFL specificDifficulty 1/5
What is 'churning' under Florida insurance law?
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Answer & full 3-part explanation (select an option above, or peek)
Why D is correct
Under Fla. Stat. 626.9541(1)(l),(aa), churning is a producer's use of policies of an existing customer — typically by borrowing or drawing on the policy's accumulated values — to buy additional insurance or annuities, primarily to benefit the producer through added commissions rather than to serve the customer. It is classified with twisting as a first-degree misdemeanor and carries substantial administrative fines. The customer is left with coverage that serves the producer's wallet, not the customer's needs.
Why the other options are wrong
- A) Rebating is offering inducements not specified in the contract; it is a different offense from churning.
- B) Twisting induces replacement of an existing policy through misrepresentation; churning mines the existing policy's values for new sales.
- C) Misrepresenting benefits in an advertisement is false advertising; churning involves exploiting existing policy values.
Memory hook
Churn the old policy's cash to sell the new one.