What is an act of coercion in insurance practices?

An act of coercion in insurance practices involves influencing a policyholder's decision through pressure or manipulative tactics, rather than allowing them to make an informed choice based on their needs. Mandating a specific insurance purchase as a loan condition is a clear example of coercion because it forces a borrower to buy a particular insurance policy to secure a loan, limiting their freedom to choose among different options. This behavior is considered unethical and can be legally questionable, as it undermines the client's ability to evaluate insurance products based on their preferences and circumstances.

Other options, while potentially unethical in certain contexts, do not represent coercion in the same direct manner. Offering lower premiums for long-term policies could be seen as an incentive rather than coercion. Requiring additional fees for special services might fall into a different regulatory category regarding transparency and fairness, but it doesn't inherently coerce the client into making a purchase. Encouraging clients to switch insurers can be a part of competitive business practices and does not constitute coercion unless it involves pressure tactics that force a client to change against their will.