Churning

UPDATED: Jul 12, 2023Fact Checked

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

UPDATED: Jul 12, 2023

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UPDATED: Jul 12, 2023Fact Checked

a fraudulent practice by insurance agents to repeatedly persuade their customers to replace existing policies with new ones. The agent may be tempted to churn because commissions are higher in the first year of the policy (makes more money for himself) or because the agent represents a different insurance company.

Churning: A Fraudulent Practice in Insurance

Case Study 1: Misleading Policy Replacements

Sarah had been a loyal customer of an insurance agent for years. However, the agent repeatedly convinced her to replace her existing policies with new ones, claiming better coverage and lower premiums. Unbeknownst to Sarah, the agent was engaging in churning to earn higher commissions. Recognizing the fraudulent practice, Sarah sought legal assistance to resolve the issue.

Case Study 2: Switching to a Different Insurance Company

John’s insurance agent persuaded him to switch to a different insurance company, promising superior benefits and coverage. Unknown to John, the agent had a financial incentive to recommend the new company. Falling victim to churning, John experienced financial losses and confusion as a result of the policy replacements.

Case Study 3: High Commissions and Misleading Information

Lisa’s insurance agent repeatedly urged her to switch policies, highlighting the high commissions the agent would earn. Using misleading information, the agent convinced Lisa that the new policies were better than her existing ones. Unaware of the agent’s fraudulent intentions, Lisa suffered financial consequences due to the churning.

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Jeffrey Johnson

Insurance Lawyer

Jeffrey Johnson is a legal writer with a focus on personal injury. He has worked on personal injury and sovereign immunity litigation in addition to experience in family, estate, and criminal law. He earned a J.D. from the University of Baltimore and has worked in legal offices and non-profits in Maryland, Texas, and North Carolina. He has also earned an MFA in screenwriting from Chapman Univer...

Insurance Lawyer

Mary Martin

Published Legal Expert

Mary Martin has been a legal writer and editor for over 20 years, responsible for ensuring that content is straightforward, correct, and helpful for the consumer. In addition, she worked on writing monthly newsletter columns for media, lawyers, and consumers. Ms. Martin also has experience with internal staff and HR operations. Mary was employed for almost 30 years by the nationwide legal publi...

Published Legal Expert

Editorial Guidelines: We are a free online resource for anyone interested in learning more about legal topics and insurance. Our goal is to be an objective, third-party resource for everything legal and insurance related. We update our site regularly, and all content is reviewed by experts.

Free Insurance Quote Comparison

Enter your ZIP code below to compare cheap insurance rates.

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