What is the act of requiring a borrower to purchase credit insurance from a specific company considered?

The act of requiring a borrower to purchase credit insurance from a specific company falls under coercion. Coercion involves forcing someone to act in a certain way, usually through pressure or manipulation. In this context, if a lender requires a borrower to obtain insurance from a particular provider as a condition of securing a loan, it places undue pressure on the borrower, limiting their choice and freedom in selecting insurance that may better fit their needs or budget.

This practice can create a conflict of interest and impede a borrower's ability to make informed decisions, illustrating the essence of coercion where the lender takes advantage of its position to unduly influence the borrower’s choice. Understanding this aspect is crucial, as such practices can also violate consumer protection laws that aim to safeguard borrowers from unethical lending practices.