Twisting vs Churning

Twisting and churning are unethical (and often illegal) sales practices in the insurance industry. They both involve convincing a policyholder to replace an existing policy, but the key difference lies in who benefits and how.

Twisting

• Definition: The act of persuading a policyholder to switch from one insurance policy to another from a different insurer, using misleading or false information.

• Goal: Typically to earn a commission.

• Example: An agent convinces a client to cancel a perfectly good policy with Company A and buy a new one from Company B by falsely claiming it’s better—when it’s not.

• Key Point: Misrepresentation is made to secure a sale with a different carrier.

Churning

• Definition: The practice of encouraging a policyholder to make unnecessary changes to a policy or buy a new one with the same insurer, often to generate more commissions.

• Goal: Also commission-driven, but done within the same insurance company.

• Example: An agent sells a new policy to a client from the same insurer and uses the cash value from the old one to fund it, without any real benefit to the client.

• Key Point: The client often ends up with a worse policy or loses value, and the agent earns a new commission.