What does twisting refer to in insurance?

Twisting in the context of insurance specifically refers to the unethical practice of persuading a policyholder to cancel an existing insurance policy and take out a new one, usually with a different insurer, based on false information or misrepresentations about the benefits or features of the new policy. This practice can result in the policyholder being worse off, as they may not truly understand what they are giving up, and it often leads to a gap in coverage or increased premium costs.

By taking advantage of the misinformation, the agent or broker benefits at the policyholder's expense, sometimes earning higher commissions on the new policy. This behavior undermines the trust and ethical standards expected in the insurance industry, and regulations exist to protect consumers from such practices.

The other choices do not accurately describe twisting: increasing coverage involves enhancements to an existing policy rather than replacing it, promoting multiple policies is a legitimate marketing technique that does not involve misrepresentation, and offering discounts pertains to customer retention strategies, which are both ethical practices in the insurance field.