A North Carolina producer tells a policyholder that the terms of the policy the policyholder currently owns are far worse than they actually are, in order to induce the policyholder to let the policy lapse and buy a new one. This conduct is:

Why B is correct

Under G.S. 58-33-75, no producer may make any written or oral statement that willfully misrepresents or makes an incomplete comparison of policy terms to induce a policyholder to lapse, forfeit, surrender, exchange, or convert a policy. That conduct is twisting, and it exposes the producer to civil penalties and license action.

Why the other options are wrong

• A) Rebating involves giving value not specified in the policy as an inducement to purchase; nothing of value was offered here.
• C) Coercion is compelling another party's action through pressure; the wrong here is a misrepresentation, not compulsion.
• D) Churning is inducing repeated replacements primarily to generate commissions; here a single misrepresentation induced the lapse, which is twisting.

Memory hook

Bad-mouthing the old policy to force a swap is twisting.

Why D is correct

Under G.S. 58-3-115, no insurer may issue or circulate any written or oral statement that willfully misrepresents or makes an incomplete comparison of policy terms to induce a policyholder to lapse, forfeit, surrender, exchange or convert a policy — the practice known as twisting. A parallel producer-side prohibition appears at G.S. 58-33-75, with penalties running through G.S. 58-2-70 and G.S. 58-33-46.

Why the other options are wrong

• A) Rebating is offering an inducement not specified in the policy, such as a cash kickback — not a misleading comparison of terms.
• B) Defamation concerns false statements about a competitor's financial condition, not comparisons made to the client's own policy.
• C) Coercion involves unlawful pressure forcing a choice; an incomplete comparison aimed at inducing a surrender is twisting.

Memory hook

Incomplete comparison to force a swap = twisting.