An agent must deal honestly with clients, insurers, and regulators at all times. The prohibition on misrepresentation applies in multiple directions:
To clients: The agent must not misrepresent the terms of a policy, the amount of a benefit, the conditions under which a benefit is payable, or the financial strength of an insurer. Omitting a material fact that the client would want to know is itself a form of misrepresentation.
In advertising: All advertising and promotional material must be accurate and not misleading. An agent cannot use exaggerated claims about expected returns, overstate surrender values, or imply government backing for a private insurer's product.
To insurers: When submitting an application, the agent must accurately record the client's answers. Coaching a client to answer dishonestly, or knowingly submitting inaccurate application information, is a serious disciplinable and potentially criminal offence.
Holding out: An agent must not claim credentials, specializations, or licences they do not hold. Representing oneself as a financial planner, investment advisor, or tax specialist outside the scope of an insurance licence is improper holding out.
Twisting: Inducing a client to replace a policy from one insurer with a policy from another by misrepresenting or downplaying the features of the existing policy is called twisting. It breaches the honesty duty and triggers specific replacement-disclosure obligations (covered in the disclosure module).
Common mistake: treating advertising obligations as less stringent than face-to-face advice obligations. Regulators apply the same honesty standard to promotional materials.
Recall: Give one example of misrepresentation to a client and one example of misrepresentation to an insurer. What is twisting?