Creating a false sense of urgency

Oct 13, 2025 by wbrum.org 100 views

Introduction

The insurance industry is built on trust and transparency. Insurers rely on policyholders to provide accurate information about their risk profiles, health, and other relevant factors to determine the premiums and coverage. However, some unscrupulous insurance agents may resort to unethical practices to convince prospective insureds to buy a policy. One such practice is called "twisting." In this article, we will delve into the concept of twisting, its implications, and why it's a serious issue in the insurance industry.

What is Twisting?

Twisting is a practice where an insurance agent or broker exaggerates or misrepresents the benefits of an insurance policy to convince a prospective insured to buy it. This can include making false claims about the policy's coverage, premium rates, or other features. The goal of twisting is to create a false sense of security or urgency, making the prospective insured feel like they need the policy without fully understanding its terms and conditions.

Types of Twisting

There are several types of twisting that insurance agents may employ:

Overstating benefits: Exaggerating the coverage or benefits of a policy to make it seem more attractive.
Misrepresenting premiums: Falsely claiming that a policy is cheaper or more affordable than it actually is.
Downplaying risks: Minimizing or ignoring potential risks or exclusions in a policy.
Creating a false sense of urgency: Pressuring a prospective insured to buy a policy quickly, without giving them time to review the terms and conditions.

Why is Twisting a Problem?

Twisting is a serious issue in the insurance industry because it can lead to:

Policyholder dissatisfaction: When policyholders discover that they have been misled, they may feel betrayed and lose trust in the insurance company.
Financial losses: Twisting can result in policyholders paying higher premiums or buying policies that don't provide adequate coverage, leading to financial losses.
Reputation damage: Insurance companies that allow twisting to occur may suffer reputational damage, leading to a loss of business and revenue.

Consequences of Twisting

If an insurance agent is found to be twisting, they may face:

Disciplinary action: Insurance companies may take disciplinary action, including fines, suspension, or termination of the agent's contract.
Civil lawsuits: Policyholders who have been misled may sue the insurance company for damages.
Regulatory action: Regulatory bodies may take action against the insurance company for failing to prevent twisting.

Preventing Twisting

To prevent twisting, insurance companies can:

Implement robust training programs: Educate agents on the importance of transparency and honesty in sales practices.
Monitor sales activities: Regularly review sales activities to detect any suspicious behavior.
Encourage policyholder feedback: Collect feedback from policyholders to identify potential issues with sales practices.

Conclusion

Twisting is a serious issue in the insurance industry that can lead to policyholder dissatisfaction, financial losses, and reputational damage. Insurance companies must take steps to prevent twisting, including implementing robust training programs, monitoring sales activities, and encouraging policyholder feedback. By doing so, they can maintain the trust and confidence of their policyholders and ensure a fair and transparent sales process.

Recommendations

Insurance companies: Implement robust training programs, monitor sales activities, and encourage policyholder feedback to prevent twisting.
Policyholders: Be cautious when buying insurance policies and carefully review the terms and conditions before making a purchase.
Regulatory bodies: Enforce regulations and take action against insurance companies that allow twisting to occur.

Glossary

Twisting: A practice where an insurance agent or broker exaggerates or misrepresents the benefits of an insurance policy to convince a prospective insured to buy it.
Rebating: A practice where an insurance agent or broker offers a discount or incentive to a policyholder in exchange for their business.
Intimidation: A practice where an insurance agent or broker uses coercion or threats to convince a prospective insured to buy a policy.
Misrepresentation: A practice where an insurance agent or broker makes false claims about a policy's coverage, premium rates, or other features.

References

Insurance Regulatory Authority: "Guidelines for Insurance Sales Practices."
National Association of Insurance Commissioners: "Model Regulation for Insurance Sales Practices."
Insurance Information Institute: "Insurance Sales Practices: What You Need to Know."
Frequently Asked Questions: Twisting in Insurance Sales ===========================================================

Q: What is twisting in insurance sales?

A: Twisting is a practice where an insurance agent or broker exaggerates or misrepresents the benefits of an insurance policy to convince a prospective insured to buy it.

Q: What are the types of twisting?

A: There are several types of twisting, including:

Overstating benefits: Exaggerating the coverage or benefits of a policy to make it seem more attractive.
Misrepresenting premiums: Falsely claiming that a policy is cheaper or more affordable than it actually is.
Downplaying risks: Minimizing or ignoring potential risks or exclusions in a policy.
Creating a false sense of urgency: Pressuring a prospective insured to buy a policy quickly, without giving them time to review the terms and conditions.

Q: Why is twisting a problem in insurance sales?

A: Twisting is a problem in insurance sales because it can lead to:

Policyholder dissatisfaction: When policyholders discover that they have been misled, they may feel betrayed and lose trust in the insurance company.
Financial losses: Twisting can result in policyholders paying higher premiums or buying policies that don't provide adequate coverage, leading to financial losses.
Reputation damage: Insurance companies that allow twisting to occur may suffer reputational damage, leading to a loss of business and revenue.

Q: What are the consequences of twisting?

A: If an insurance agent is found to be twisting, they may face:

Disciplinary action: Insurance companies may take disciplinary action, including fines, suspension, or termination of the agent's contract.
Civil lawsuits: Policyholders who have been misled may sue the insurance company for damages.
Regulatory action: Regulatory bodies may take action against the insurance company for failing to prevent twisting.

Q: How can insurance companies prevent twisting?

A: Insurance companies can prevent twisting by:

Implementing robust training programs: Educate agents on the importance of transparency and honesty in sales practices.
Monitoring sales activities: Regularly review sales activities to detect any suspicious behavior.
Encouraging policyholder feedback: Collect feedback from policyholders to identify potential issues with sales practices.

Q: What can policyholders do to avoid twisting?

A: Policyholders can avoid twisting by:

Carefully reviewing policy terms and conditions: Make sure to understand what is covered and what is not.
Asking questions: Don't be afraid to ask questions about the policy or the sales process.
Seeking multiple quotes: Compare quotes from different insurance companies to ensure you are getting the best deal.

Q: What are the penalties for twisting?

A: The penalties for twisting can vary depending on the jurisdiction and the severity of the offense. However, some common penalties include:

Fines: Insurance companies may be fined for allowing twisting to occur.
Suspension or termination of agent contracts: Insurance agents who are found to be twisting may have their contracts suspended or terminated.
Civil lawsuits: Policyholders who have been misled may sue the insurance company for damages.

Q: How can policyholders report twisting?

A: Policyholders can report twisting by:

Contacting the insurance company: Reach out to the insurance company's customer service department to report any suspicious behavior.
Filing a complaint with the regulatory body: File a complaint with the regulatory body in your state or country.
Seeking legal advice: Consult with a lawyer to understand your rights and options.

Q: What is the difference between twisting and rebating?

A: Twisting and rebating are both forms of unethical sales practices in the insurance industry. However, the key difference is that twisting involves exaggerating or misrepresenting the benefits of a policy, while rebating involves offering a discount or incentive in exchange for business.

Q: What is the difference between twisting and intimidation?

A: Twisting and intimidation are both forms of unethical sales practices in the insurance industry. However, the key difference is that twisting involves exaggerating or misrepresenting the benefits of a policy, while intimidation involves using coercion or threats to convince a prospective insured to buy a policy.

Q: What is the difference between twisting and misrepresentation?

A: Twisting and misrepresentation are both forms of unethical sales practices in the insurance industry. However, the key difference is that twisting involves exaggerating or misrepresenting the benefits of a policy, while misrepresentation involves making false claims about a policy's coverage, premium rates, or other features.