What is the practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents called?

The practice described in the question is known as "twisting." Twisting involves the use of misrepresentation or misstatement of facts by an insurance agent or broker to persuade a policyholder to replace an existing policy with a new one issued by a different insurer. This often results in the policyholder losing benefits and incurring additional costs, as they may not fully understand the implications of changing their policy.

While churning relates to the practice of inducing clients to replace policies to generate commissions for the producer without the client benefiting from the change, twisting specifically emphasizes the use of misrepresentation to convince policyholders to switch policies. Therefore, the crucial element distinguishing twisting is that it involves deceptive practices aimed at generating advantages for the agent or broker at the expense of the policyholder.

Understanding twisting is essential, as it addresses ethical practices within the insurance industry and highlights the importance for agents to provide honest, accurate information to clients.