State RegulationsFL specificDifficulty 1/5
A Florida agent induces a policyholder to drop an existing policy by misrepresenting its terms, causing the client to lose valuable benefits. What is this practice called?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under Fla. Stat. 626.9541(1)(l),(aa), twisting is misrepresenting the terms or benefits of an existing policy to induce a policyholder to lapse, surrender, or replace it - exactly what this agent did, at the cost of the client's valuable existing benefits. Twisting and churning are first-degree misdemeanors carrying fines up to $12,500 (nonwillful) or $187,500 (willful and with fraud), plus license discipline. The other terms describe unrelated insurance concepts.
Why the other options are wrong
- A) Rebalancing is an investment-portfolio term, not a prohibited insurance sales practice.
- B) Reinsurance is insurance purchased by insurers to spread their own risk.
- D) Subrogation is an insurer's right to recover claim payments from a responsible third party.
Memory hook
Twist the facts to kill a policy - that's twisting.