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State RegulationsPA specificDifficulty 2/5

A producer's client mentions that his cash value has grown. The producer urges him to use the accumulated value of his current policy to fund a new policy purchase, exaggerating the new policy's projected returns. The switch would leave the client worse off. Which unfair practice has the producer committed?

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Answer & full 3-part explanation (select an option above, or peek)

Why B is correct

The producer induced a policyholder to move out of an existing policy into a new one through an exaggerated, incomplete comparison, and the switch is to the client's detriment: that is the textbook definition of twisting under 40 P.S. § 473. Because the client's existing coverage funds the new sale and the producer profits from the new commission, Pennsylvania treats the pattern as churning-adjacent abuse and enforces it through the Pennsylvania Insurance Department under the Unfair Insurance Practices Act, 40 P.S. § 1171.5.

Why the other options are wrong

  • A) Boycott, coercion, and intimidation concern concerted pressure to restrain trade; there is no coercion of an insurer or anyone else here.
  • C) Unfair discrimination concerns unjustified differences in rates or benefits between similarly situated individuals, not a harmful policy switch.
  • D) False advertising addresses misleading messages to the public; the exaggeration here was a private inducement to one client to replace coverage, which is the twisting definition.

Memory hook

Old policy in, new commission out, client worse off: Pennsylvania reads that as twisting.

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