Georgia Property & Casualty Practice Exam

When comparing her insurance company's policies to those of Zenith Insurance, Melanie makes a misleading statement to convince an insurance prospect to terminate a policy with Zenith and buy one from Melanie's company. Melanie has engaged in:

1. Twisting

2. Rebating

3. Unfair discrimination

4. Defamation

The correct answer is: Twisting

Melanie has engaged in twisting, which refers to the unethical practice where an insurance agent persuades a policyholder to switch insurance policies by making misleading or false statements about the competing insurer's policy. This act typically aims to convince the customer that the new policy offers better coverage or advantages, even when that may not be true. In this context, Melanie's actions specifically involve providing distorted information about Zenith Insurance's policies to influence a prospect’s decision. This practice is particularly problematic in the insurance industry because it undermines the trust between customers and insurers and can lead to significant financial losses for individuals who end up in less suitable coverage due to misleading information. Rebating involves offering a portion of the agent's commission to an insured as an incentive, which is not the case here. Unfair discrimination pertains to treating individuals differently based on their characteristics when it comes to underwriting or pricing policies, which is not directly related to Melanie's situation. Defamation entails making false statements about another party that damage their reputation; while Melanie’s statements might fall into this category, the focus here is primarily on the act of twisting—making misleading comparisons to entice potential clients away from a competitor.