If an agent misleads an insured into surrendering an existing policy, what is this action known as?

The action of misleading an insured into surrendering an existing policy is known as "twisting." This term refers specifically to the unethical practice within the insurance industry where an agent persuades a policyholder to replace their existing insurance policy with a new one, often through misrepresentation or misleading information. The objective is usually to secure a new commission for the agent, often harming the insured in the process due to consequences like loss of benefits or incurring additional costs.

Understanding twisting is critical because it highlights the importance of ethical practices within the insurance industry. Agents have a fiduciary responsibility to act in the best interest of their clients, and twisting violates this trust.

In contrast, other concepts such as churning relate to the practice of replacing one policy with another of similar kind to benefit the agent financially. Embezzlement involves theft or misappropriation of funds, which is different from the misleading nature of twisting. Deceptive marketing refers to broader tactics that might misrepresent a product but does not specifically address the issue of policy replacement under false pretenses. Therefore, the specific act of misleading an insured regarding surrendering a policy aligns most closely with the definition of twisting.