What does the term "twisting" refer to in insurance practices?

The term "twisting" refers specifically to the practice of inducing a client to replace an existing insurance policy with a new one without justification. This could involve misleading the client about the benefits of the new policy or the downsides of the existing one. Twisting is considered unethical and potentially illegal because it can deceive policyholders and lead them to make decisions that may not be in their best financial interest. It undermines the trust that is essential in the insurance industry and can result in financial losses for the policyholders who may end up with less coverage or higher premiums. This practice is prohibited under many insurance regulations to protect consumers and maintain the integrity of the insurance market.

The other options do not accurately define "twisting." Offering discounts to new customers is a legitimate marketing strategy, encouraging policyholders to file claims is a normal part of the insurance process, and creating multiple insurance policies can be a strategy for comprehensive coverage depending on the client’s needs. However, these actions do not align with the definition of twisting, which specifically concerns the unjustified replacement of an insurance policy.