(1) The purpose of a license issued under this code to a life agent is to authorize and enable the licensee to actively and in good faith engage in the insurance business as such agent with respect to the general public and to facilitate the public supervision of such activities in the public interest, and not to enable the licensee to receive an unlawful rebate of premium in the form of commission or other compensation as an agent or to enable the licensee to receive an unlawful rebate of premium in the form of commission or other compensation as an agent.
(2) The department shall not grant, renew, continue, or permit the existence of any license or appointment of a life agent if it determines that the licensee or appointee obtained or attempted to obtain the license or appointment primarily for the purpose of soliciting, negotiating, or procuring controlled business.
Life insurance or annuity contracts covering himself or herself or family members; officers, directors, stockholders, partners, or employees of a business in which he or she or a family member is engaged; or the debtors of a firm, association, or corporation in which he or she serves as an officer, director, stockholder, or employee.
3) A violation of this section is deemed to exist or to be probable (as to an applicant for appointment) if the department determines that, during a 12-month period, the premium writings represented by such controlled business insurance contracts signed, issued, or sold by the licensee or appointee have been or, in the case of an applicant for appointment, probably will be, under circumstances found by the department to exist, in excess of premium writings during the same period for the same type of controlled business insurance contracts.
(4) This section shall not be construed to prohibit the licensing and appointment of any person employed by or associated with a lending or financing institution or creditor, with respect to credit life or disability insurance policies subject to part IX of chapter 627, for borrowers from such institution.
What is the insurance definition of twisting?
Twisting is the act of persuading or attempting to persuade a policyholder to abandon an existing life insurance policy in favor of another policy of essentially the same type, using misrepresentations or incomplete comparisons of the policies’ benefits and drawbacks.
What exactly are churning and turning? – In the insurance industry, churning occurs when a producer replaces a client’s coverage with one from the same carrier that has similar or inferior benefits. Twisting refers to a replacement contract with comparable or inferior benefits from a different carrier.
- Both churning and twisting assume scenarios in which the coverage may vary slightly, but the overall parameters are identical.
- Few people would find it suspicious if a client requested a new contract to reflect different long-term care priorities or to adopt additional spouse benefits.
- But if a producer switched agencies and unexpectedly called a client in an attempt to place them in an annuity with a marginally different cap/spread, this would likely raise eyebrows.
What if, however, the client truly desires the alternative cap/spread product? What if the new contract is truly beneficial to their interests? What if they determined that the carrier was not providing the level of customer service they anticipated? What if the producer did their due diligence to inform the client of new factors affecting their future benefits? The subjectivity of what constitutes a client’s interests and the extent to which a producer must go to satisfy them is a topic for another day.
But suffice it to say that the reason there are so few strict regulations against churning is precisely because of gray-area issues. Contract details vary so widely that it is difficult to determine what constitutes a superior or inferior contract. However, state regulations address contract turnover in a specific manner.
Learn how regulations apply to churning and twisting, as well as best practices for insurers to combat this problem on the front lines, in part two. Find out how AgentSync can help carriers, MGAs, and agencies that are tasked with tracking producers and their sales activity achieve growth, compliance, and a seamless producer experience.
What is the distinction between twisting and deception?
What is the distinction between twisting and deception? – There are several significant distinctions between twisting and misrepresentation: twisting is deliberate, whereas misrepresentation is not always malicious. Second, twisting typically alters the original statement’s meaning, whereas misrepresentation can alter the tone or context.
- Finally, twisting is more likely to involve intentionality, whereas misrepresentation is not always intentional.
- On coverage applications, misrepresentation occurs when individuals provide false statements or information.
- However, it can take many forms, such as exaggerating a claim or outright lying about the event that led to their filing.
Moreover, misrepresentation would have played a significant role in the insurance company’s policy decision if it had been provided truthfully, which explains why, when discussing misrepresentation cases, it is typically the policyholder who provides false information.
- When a case of misrepresentation occurs on the part of the insured, the insurance company has the exclusive authority to terminate the policy.
- Sliding insurance is another highly unethical practice that you may wish to learn more about.
- With this type of insurance, however, it is the agent’s “fault” if he or she fails to disclose all transaction details.
This ultimately results in excessive fees for the customer.
Which of the following best describes the definition of controlled business?
Controlled enterprise A business over which a representative can exert personal influence. Typically, this includes the agent’s employer, employees, and immediate family. Most states restrict the amount of controlled business that an agent may write. The restriction prevents individuals from obtaining a license for the sole purpose of writing cheaper business for relatives, employers, and employees (such as by avoiding commission costs).
Which of the following best describes a controlled enterprise? For the purpose of selling insurance to the general public and not to controlled businesses, producers must obtain a license. Included in a controlled business is selling insurance to oneself, one’s spouse, employer, and/or one’s own company.
What is forced insurance?
Coercion and Unfair Discrimination However, coercion need not always be aggressive. It is coercion for an agent to interfere with or harm a client’s reputation or business if a policy is not purchased. Coercion refers to any action intended to remove the client’s free will.
- An agent’s “difference in sales, underwriting, pricing, claims handling, or any other insurance application function between two individuals of substantially the same underwriting classification and expectation of life or health” may constitute unfair discrimination.
- Agents should never engage in discrimination: they must offer all products and services to clients without regard to race, gender, age, ethnicity, etc.
Particularly, Section 626.9541 of the Florida Statutes cautions against unfair discrimination against victims of domestic violence or abuse: LESSON 1: BASIC PRINCIPLES OF LIFE AND HEALTH THE INSURANCE INDUSTRY AND INSURANCE