What type of misrepresentation involves persuading an insured to cancel or switch policies to their detriment?

The term that refers to the practice of persuading an insured to cancel or switch policies to their detriment is known as twisting. This occurs when an agent misrepresents or exaggerates the benefits of a new policy while downplaying or omitting the disadvantages of the current policy, leading the insured to believe that switching will provide them with better coverage or financial advantage. Twisting is detrimental to the insured because it can result in loss of existing benefits or incur additional costs, undermining their original policy's value.

In the insurance industry, twisting is considered unethical and can lead to legal consequences for agents who engage in such practices, as it erodes trust and can financially harm policyholders. Understanding this concept helps potential insurance professionals recognize the importance of ethical sales practices and compliance with regulations designed to protect consumers.