What does twisting in insurance refer to?

Twisting in insurance refers to the unethical practice of persuading a policyholder to surrender their existing insurance policy and switch to a new one based on misleading or false information. This practice is harmful because it can lead to significant financial disadvantages for the insured, such as losing benefits, incurring additional fees, or not receiving the coverage they were promised. The act of twisting often aims to benefit the agent or broker, who may receive commission or other financial incentives from the new policy, while the insured may be left with a policy that doesn't meet their needs or expectations.

In this context, the other choices do not accurately capture the definition of twisting. Inviting competition among agents is a legitimate business practice aimed at improving service and pricing in the insurance market. Creating new policies for existing clients can be part of good customer service, enhancing the relationship between the insurer and the policyholder. Offering loyalty rewards to long-term policyholders is a practice intended to retain customers and incentivize continued business, which is ethical and beneficial.