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1.11.2 Twisting

Twisting is also called external replacement and is the practice of inducing a person to drop existing insurance to buy similar coverage with another producer or company. Replacing existing life insurance with a new life insurance policy based upon incomplete or incorrect representation is called twisting. This often is associated with making false statements about another insurer or producer, an illegal act that also runs contrary to ethical market conduct.

Violators of this law are guilty of a first degree misdemeanor if proven to have exhibited fraudulent conduct. A violation is also punishable by an administrative fine of $5,000 for each nonwillful violation or $75,000 for each willful violation.

Administrative fines for twisting, churning, or fraudulent signatures may not exceed an aggregate amount of $50,000 for all nonwillful violations arising out of the same action or an aggregate amount of $250,000 for all willful violations arising out of the same action.