What Is Coercion in Insurance?

What is coercion in insurance? What constitutes a threat?

3 min read
What Is Coercion in Insurance?
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What is coercion in insurance? What constitutes a threat? It may be a threat that a customer can avoid - turning to a competitor or other source of coverage. But the customer is too lazy to find a substitute. The customer is then coerced into wearing a step-counter and sharing its data with the insurance company. In this case, the customer is forced into doing something they wouldn't normally do.

Coercion Explained

A legal term used to describe unfair insurance practices is coercion. This term describes any intimidation, force, or threats intended to compel a person to do something against their will. Typically, an insurance agent uses physical or mental threats to pressure a client into transacting an insurance policy. In some cases, coercion may include threats such as a lawsuit, denial of benefits, or discharge from employment.

Coercion in insurance is closely related to other forms of oppression in our society. Generally, people who want to get something or to have certain rights use threats or force to achieve that goal. In the insurance industry, agents use psychological pressure to get people to transact with them, affecting the individual's emotions and mental state. In the past, this practice has been widespread, but this practice has only recently been uncovered.

Twisting

Insurance twisting is an unethical practice in which agents manipulate their clients to buy a policy that is not necessarily a better replacement. Frequently, this is a matter of profit and commission. Those who want to avoid being duped into a deal with an insurance agent should educate themselves about twisting. It is crucial to understand how insurance agents operate and the penalties incurred if the agent is caught in this practice.

Insurance agents are forbidden from coercion or twisting to push customers to buy a different policy, even if the former has better benefits. This practice is often called "churning," and it can occur between agents of other insurance companies. In most cases, the sold policy does not offer the same benefits as the one the customer had before. The purpose of twisting is to increase the commission of the agent.

Threats

This article discusses the two main interpretations of the notion of coercion. Both views argue that a threat is a form of coercion when the result is undesirable or incompatible with the target's moral rights. For example, a danger of increased premiums to avoid data surveillance would constitute a threat if it makes the target worse off. The threat could be a simple offer, and the danger could be a request to share data or other information. However, the threat is not necessarily coerced if the target agrees to the terms.

The insurers' announcement to share surveillance data is an example of a threat of coercion. Suppose they cannot obtain the information they need to determine whether a client is high-risk or low-risk. In that case, they could force traditional insurers to raise premiums or discriminate between their high-risk and low-risk clients. They would need to collect more data on clients and charge higher premiums to accomplish this goal.

Untrue, deceptive, or misleading statement

Defamation in insurance refers to making false statements on an insurance application. It is considered fraud if it is done to defraud an insurance company or a person buying an insurance product. False statements must be disclosed when made as a condition for purchasing a policy. These types of misrepresentations can happen in any kind of insurance application, from an application for a car insurance policy to the application for a home insurance policy.

False statements in insurance advertising may also constitute defamation. Defamation is a false statement that is intended to embarrass a person. A piece of wrong information in advertising may be derogatory to another person or business and is calculated to harm them. Another form of defamation is a boycott, which may lead to a monopoly in a company.