A licensed producer in Durham tells a policyholder that her current health policy is about to lapse and that its benefits are far inferior to a new policy he is selling, knowing the comparison is false and incomplete, in order to induce her to surrender the existing policy. What is this practice called?

Why B is correct

Under G.S. 58-33-75, a producer may not make any written or oral statement that willfully misrepresents the terms or benefits of a policy or makes an incomplete comparison in order to induce a policyholder to lapse, surrender, exchange, or convert a policy; G.S. 58-3-115 imposes the same prohibition on insurers. Violations expose the producer to civil penalties under G.S. 58-2-70 and license action under G.S. 58-33-46. The hallmarks are misrepresentation plus inducement to replace existing coverage.

Why the other options are wrong

• A) Rebating under G.S. 58-33-85 involves giving or offering rebates or valuable considerations not specified in the policy as an inducement to purchase; no rebate is involved here.
• C) Coercion involves forcing a party to act through threats or pressure, such as tying insurance to a loan; the conduct described is a misrepresentation to induce replacement.
• D) Unfair discrimination involves charging different rates to persons of the same class and life expectancy; nothing in the stem involves rate discrimination.

Memory hook

Twisting = twisted facts to force a switch.