What does the term "churning" refer to in insurance?

Churning in insurance refers specifically to the practice of replacing a client's existing insurance coverage with a new policy that typically offers similar or even diminished benefits, often from the same carrier. This can lead to unnecessary costs for the client, as they may incur new commissions, fees, or premiums without gaining substantial benefits from the new policy.

This practice is generally frowned upon in the insurance industry because it can harm the client's financial interests and can be viewed as an unethical act by the insurance agent. It prioritizes the agent's commissions over the client's best interests, which underlines the importance of maintaining ethical standards in professional practice.

Other options describe legitimate practices within the insurance industry, such as depositing clients with better coverage or offering discounts, but do not capture the essence of churning. Timely renewals of policies simply reflect good practice management, further distinguishing them from the unethical implications of churning. Understanding these distinctions is crucial for maintaining professional integrity in the insurance profession.