North Carolina Adjuster Practice Exam

Which statement correctly classifies the unethical practice known as twisting?

1. It involves falsely promising benefits

2. It is a form of high-pressure selling

3. It occurs when an agent convinces a customer to switch policies based on misinformation

4. It signifies the misleading information provided on claims

The correct answer is: It occurs when an agent convinces a customer to switch policies based on misinformation

Twisting is classified as an unethical practice where an agent manipulates or misrepresents information to persuade a customer to switch insurance policies. Specifically, this involves convincing a customer to change from one insurer to another by presenting false or misleading information about the original policy or the new policy. The core of twisting lies in the misinformation provided, which can lead the customer to believe that they will receive greater benefits or that their current coverage is inadequate. Understanding twisting is crucial for maintaining ethical standards in the insurance industry. It is illegal because it undermines the client's ability to make informed decisions based on accurate information and can lead to financial harm or the loss of necessary coverage. The other options touch on aspects of unethical behavior associated with insurance but do not accurately capture the essence of twisting. For instance, while falsely promising benefits can be part of twisting, it does not specifically address the act of misrepresenting policies to induce a switch. Similarly, high-pressure selling is a different unethical tactic focused on the selling experience rather than the act of misleading clients about policy details. Lastly, misleading information provided on claims pertains more to the claims process rather than the act of persuading a client to change their insurance policy based on incorrect information.