Twisting vs churning vs sliding vs rebating

Florida's unfair-methods-of-competition list is worth real points, and the exam tests the distinctions between terms that sound interchangeable. Learn them as contrasts, not definitions.

Questions and answers, explained

All 12 questions above, with the correct answer and why it is correct. Everything here is on twisting vs churning vs sliding vs rebating.

1. A pattern of consumer complaints alleges that an authorized Florida health insurer routinely fails to acknowledge and act promptly on claim communications. Which regulator has authority to examine the insurer and impose an administrative fine on it for this conduct?

   • AThe Department of Financial Services, because claim handling is always licensee conduct
   • BThe Office of Insurance Regulation, which regulates insurer conduct and may fine the insurer under the unfair trade practices provisionsCorrect
   • CThe Office of Financial Regulation, because the insurer holds investment assets
   • DThe Financial Services Commission, sitting as an appellate body

   Why: Unfair claim settlement practices are listed in s. 626.9541(1)(i), F.S., and when the wrongdoer is an insurer the enforcing agency is the OIR, which conducts market conduct examinations and may fine the insurer under s. 624.4211, F.S. (up to $12,500 per nonwillful and $100,000 per willful violation). The DFS — the closest distractor — has jurisdiction over licensed individuals and agencies (agents, adjusters, customer representatives), not over the insurer's corporate conduct. (Outline FL-I.C)

   Reference ss. 626.9541(1)(i), 624.4211, F.S. — Outline FL-I.C

2. Using misleading statements, an agent convinces a client to use the cash values of her existing whole life policy to buy a new policy from the SAME insurer, primarily to generate new first-year commissions. This prohibited practice is known as:

   • ATwisting
   • BRebating
   • CSliding
   • DChurningCorrect

   Why: Churning under s. 626.9541(1)(aa), F.S., is the practice of using policy values of an existing policy to purchase another policy with the SAME insurer, through misrepresentation or without a reasonable basis, primarily for the agent's benefit. Twisting, the closest distractor, involves misrepresentations that induce replacement of a policy with one from ANOTHER insurer (s. 626.9541(1)(l), F.S.).

   Reference FL-II.A; s. 626.9541(1)(l), (1)(aa), F.S.

3. An applicant asks whether her recent back surgery will be covered. Wanting the sale, the agent assures her it will be, although the policy contains a preexisting condition limitation. A claim for the back condition is later denied. Which statement is MOST accurate?

   • AThe insurer must pay the claim because the agent promised that coverage would apply
   • BThe applicant has no recourse of any kind against either the insurer or the agent
   • CThe agent cannot change the policy's written terms, so the denial stands and the agent faces liabilityCorrect
   • DThe agent's oral statement automatically becomes a rider attached to the policy

   Why: A soliciting agent has authority to solicit applications and collect the initial premium, but not to waive or change policy provisions — under the entire contract provision, only an executive officer of the insurer can modify the contract in writing. Choice A confuses this with the rule that an agent's KNOWLEDGE of a fact is imputed to the insurer; knowledge is imputed, but authority to rewrite coverage is not, so the insured's remedy runs against the agent, whose misstatement is an errors-and-omissions exposure and a misrepresentation of policy benefits under s. 626.9541(1)(a), F.S.

   Reference Outline IX (Field Underwriting Procedures): agent authority and misrepresentation; s. 626.9541(1)(a), F.S.

4. An insurer files a new individual health policy form and rate schedule for Florida. In the same week, one of its appointed agents is accused of forging an applicant's signature on a delivery receipt. Which statement correctly assigns regulatory responsibility?

   • AThe OIR reviews the form and rate filing; the DFS investigates and disciplines the agentCorrect
   • BThe DFS reviews the form and rate filing; the OIR investigates and disciplines the agent
   • CThe Financial Services Commission decides both matters directly
   • DThe OIR handles both matters, because both arise out of the same insurer's business

   Why: The split is by subject, not by whose business it is: under s. 20.121(3)(a), F.S., the OIR regulates insurers — certificates of authority, rates, policy forms, solvency, and market conduct — while the DFS licenses and disciplines agents and adjusters under ch. 626, F.S. Option D is the closest distractor, but the agent's forgery is licensee misconduct under s. 626.9541(1)(ee), F.S., which the DFS enforces. (Outline FL-I.A)

   Reference ss. 20.121(3)(a), 626.9541(1)(ee), F.S. — Outline FL-I.A

5. An agent is found to have committed churning involving fraudulent conduct. Under s. 626.9521, F.S., the maximum administrative fine for each willful violation is:

   • A$12,500
   • B$100,000
   • C$125,000
   • D$187,500Correct

   Why: For twisting or churning, s. 626.9521(3), F.S., imposes an administrative fine of up to $12,500 per nonwillful violation and up to $187,500 per willful violation (willful violations involve fraudulent conduct), and the violation is punishable as a first-degree misdemeanor. These caps were raised by 2022 legislation; the $100,000 figure is the current cap for other willful unfair trade practice violations, making it the closest distractor.

   Reference FL-II.A; ss. 626.9521(3), 626.9541, F.S.

6. An agent tells prospects that a competing insurer "is on the verge of collapse and will not be able to pay claims," a statement she knows to be false. This conduct is best classified as:

   • AdefamationCorrect
   • Btwisting
   • Cunfair discrimination
   • Dboycott

   Why: Defamation under s. 626.9541(1)(c), F.S., is knowingly making, publishing, disseminating, or circulating a false or maliciously critical or derogatory statement about the financial condition of an insurer that is calculated to injure it. Twisting — the closest distractor — also involves misleading statements, but it requires inducing an existing policyholder to lapse, forfeit, surrender, or convert a policy, and no existing policy is being replaced here. (Outline FL-I.I)

   Reference s. 626.9541(1)(c), F.S. — Outline FL-I.I

7. A lender tells a mortgage applicant that his loan will be approved only if he buys his life insurance through the lender's affiliated agency. This practice is prohibited as:

   • Asliding — charging for a coverage the applicant did not knowingly request
   • Bcoercion, which is prohibited together with boycott and intimidationCorrect
   • Crebating — giving part of the premium back to the insured as an inducement
   • Dcontrolled business — writing insurance chiefly on the agent’s own interests

   Why: Section 626.9541(1)(d), F.S., prohibits entering into any agreement to commit, or committing, any act of boycott, coercion, or intimidation that results in or tends to result in unreasonable restraint of, or monopoly in, the business of insurance — conditioning credit on the purchase of insurance from a specified source is the classic example. Sliding is the closest distractor but concerns deceptively adding coverage or misstating that coverage is required by law, not using economic leverage to force the sale. (Outline FL-I.I)

   Reference s. 626.9541(1)(d), F.S. — Outline FL-I.I

8. An insurer charges two 45-year-old applicants of the same class and essentially the same expectation of life materially different premium rates for identical life policies, with no actuarial justification. This is prohibited as:

   • Aunfair discriminationCorrect
   • Bsliding
   • Cmisrepresentation
   • Dillegal dealings in premiums

   Why: Section 626.9541(1)(g), F.S., defines unfair discrimination in life insurance and annuities as making any distinction between individuals of the same actuarially supportable class and equal expectation of life in rates, dividends, or benefits. Option D is the closest distractor, but illegal dealings in premiums under s. 626.9541(1)(o), F.S., concerns charging a premium that departs from the insurer's applicable filing or rating system, not distinguishing between similarly situated insureds. (Outline FL-I.I)

   Reference s. 626.9541(1)(g), F.S. — Outline FL-I.I

9. All of the following are unfair claim settlement practices under s. 626.9541(1)(i), F.S., EXCEPT:

   • AFailing to acknowledge and act promptly upon communications about claims
   • BDenying a claim without conducting a reasonable investigation based on available information
   • CRequesting a written proof of loss on the insurer's standard form within the time the policy allowsCorrect
   • DAttempting to settle a claim on the basis of an application that was altered without the insured's knowledge or consent

   Why: Options A, B, and D are expressly listed in s. 626.9541(1)(i), F.S., as unfair claim settlement practices when committed with such frequency as to indicate a general business practice. Requesting a timely written proof of loss on the insurer's standard form is a legitimate exercise of the policy's proof-of-loss provision; it becomes a violation only if the insurer uses the request to delay or as a pretext for denial. (Outline FL-I.I)

   Reference s. 626.9541(1)(i), F.S. — Outline FL-I.I

10. So that an application will be approved at standard rates and his commission will be paid, an agent records on the application that the applicant is a nonsmoker, knowing she smokes a pack a day. Which unfair trade practice provision does this most directly violate?

    • AMisrepresentation in insurance applications — a false statement made to obtain a commissionCorrect
    • BTwisting — inducing a policyholder to lapse and replace a policy through misrepresentation
    • CSliding — charging the applicant for coverage that was never knowingly requested at all
    • DChurning — replacing a policy using the values built up in the same insurer’s existing policy

    Why: Section 626.9541(1)(k), F.S., prohibits knowingly making a false or fraudulent written or oral statement or representation on, or relative to, an insurance application, or knowingly making any such statement to obtain a fee, commission, money, or other benefit from an insurer, agent, broker, or individual. Sliding is the closest distractor, but sliding involves adding or misrepresenting coverage at the point of sale rather than falsifying an underwriting answer; the same act is also a compulsory disciplinary ground as a fraudulent or dishonest practice under s. 626.611(1)(i), F.S. (Outline FL-I.I)

    Reference ss. 626.9541(1)(k), 626.611(1)(i), F.S. — Outline FL-I.I

11. An auto dealership advertises "free credit life insurance with every vehicle purchase," and no separately identifiable charge for the coverage appears in the deal. Under Florida law this is:

    • Apermitted, because the buyer pays nothing additional
    • Bpermitted so long as the dealership holds a limited license
    • Cprohibited as free insurance offered as an inducement to the purchase of property or servicesCorrect
    • Dpermitted only if the coverage is placed with an admitted insurer

    Why: Section 626.9541(1)(n), F.S., prohibits advertising, offering, or providing free insurance as an inducement to the purchase or sale of real or personal property or of services connected with such property, and it defines "free" as insurance for which no identifiable and additional charge is made to the purchaser. Option A restates precisely the fact that makes the practice unlawful — the absence of an identifiable charge is the definition of "free," not a defense. (Outline FL-I.I)

    Reference s. 626.9541(1)(n), F.S. — Outline FL-I.I

12. During any calendar year, a Florida life or health agent may give an insured or prospective insured articles of merchandise, store gift cards, or event tickets having a total value of not more than:

    • A$25
    • B$50
    • C$100Correct
    • D$250

    Why: Section 626.9541(1)(m), F.S., permits giving insureds or prospective insureds merchandise, goods, wares, store gift cards, gift certificates, event tickets, and anti-fraud or loss mitigation services having a total value of $100 or less per insured or prospective insured in any calendar year, and separately permits charitable contributions of up to $100 per insured or prospective insured per calendar year. The $25 figure is the closest distractor: it is the separate cap that applies to title insurers and title agents, and it is also the pre-2018 general limit that still appears in outdated study materials. Gifts exceeding the limit become unlawful rebates. (Outline FL-I.I)

    Reference s. 626.9541(1)(m), F.S. — Outline FL-I.I

Drill the whole domain

• Florida Statutes and Rules — Common to All Lines (13%)
• Florida Statutes — Life and Annuity (incl. Variable Products) (10%)
• Field Underwriting Procedures (5%)

Other topics

• Free look periods on the Florida 2-15
• Annuities on the Florida 2-15
• Medicare and Medicare supplement rules
• Life policy provisions and clauses
• Disability income insurance
• Variable life, VUL and the separate account
• Annuity best interest rules for buyers 65+
• HIV testing and consent in Florida underwriting
• Premium trust funds and fiduciary duty
• Compulsory vs discretionary license discipline
• Buyer's Guide and Florida free look periods
• Florida guaranty association limits
• License, appointment and continuing education

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