Are you learning the different concepts in insurance and encountered the term coercion and wondered, “What is coercion in insurance?” Well, as defined, coercion in insurance is when someone forces a person to buy insurance.
This kind of force that someone implies to make a person purchase insurance out of their will may be physical, mental, or psychological. Additionally, coercion in insurance is considered an illegal trade practice.
Generally, coercion refers to the act wherein someone does something against their intent because someone imposes power or authority on them.
With that, any action that the agent did through coercion is illegal. In terms of insurance, this usually happens when a person in the insurance business exercises force to make someone transact insurance. Keep on reading as we discuss with you the concepts about coercion in insurance.
Concepts About Coercion In Insurance
Coercion is an illegal trade practice that removes an individual’s free will in buying insurance.
An agent often applies physical and mental threats to their client, forcing them to transact insurance even if they did not intend to. With that, here are four concepts on what is coercion in insurance to enhance your knowledge and understanding regarding this unfair practice.
Concept #1. Threats and forces
The coercion in insurance can also be related to other coercive acts that usually happen in society. For someone to fulfill their wants, they use threats and forces to trigger the victim in doing something out of their will.
For instance, an agent of an insurance company persuades a person to transact insurance under them. When the person they asked rejected their offer, they used their power to force them into applying for the insurance.
Concept #2. Psychological pressure
One way agents could persuade an individual to transact insurance with their company is psychological pressure.
Psychological pressure caused by the agents would affect the emotional and mental state of the person because of the distress they feel.
There is a high probability that the client will agree with buying the insurance unwillingly because of their unstable mental state caused by their sufferings. Psychological pressure may also include implied threats because these may also affect the psychological state of the victim.
For instance, when an agent provides threats to the person’s family members but only serves as a warning, they would choose to transact insurance instead to keep their family safe. Intimidating an individual by improper authorization and power to buy insurance is considered an illegal trade practice.
Concept #3. Blackmailing
Blackmailing is one of the most commonly used threats when coercing a person to transact insurance out of their free will. The agent may tell the person that someone will be hurt if they do not buy insurance in their company. Because of this, the individual has no choice but to begin the transaction to keep a person safe and sound.
To further understand how blackmailing is included as one of the ways to coerce an individual, take this example of an insurance agent who wants an employee to buy insurance from them. When the employee disagrees, the agent will persuade them through other means.
If the employee still does not wish to transact insurance on their company, the agent will threaten them by saying they will be fired from the company they work for if they disagree. With that, the employee will have no freedom to choose if they will buy the insurance because of the fear that they will be unemployed.
The employee’s rights to buy the insurance would be violated, which means that the agent used illegal means to persuade the employee to purchase insurance.
Despite the employee’s incapacity to accept the insurance, they had no choice but to oblige. Moreover, the agent coerced the employee to do a transaction, strengthening the agent’s unfair trade practice.
Concept #4. Coercion on overpriced products
For the last concept, insurance agents may coerce the clients on overpriced products, whether direct or indirect. In this situation, the clients may be unaware of the overpriced products, and after they processed the transaction for it, they knew that they purchased those kinds of products unknowingly.
This is another kind of coercion in insurance as they were forced to buy it because they were unknowledgeable of it at first, thus purchasing it out of their free will.
Because of the deceptive tactics of the insurance agents, the clients are coerced to purchase something they do not want. Also, the pressure that the clients had while transacting the insurance makes them buy it even if they disagree. The insurance agent made an implicit decision to make it seem that the purchase of insurance is conditional when it is not.
And those are the four concepts that you should know on what is coercion in insurance. Keep in mind to always be mindful of your decisions, mainly when you transact insurance, because this may significantly affect your life. Lastly, report an insurance company immediately if you think that it shows signs of coercion. Be aware of this to keep yourself from getting deceived.
Regardless, this is out of the topic but if you feel that you want to read more articles, then this one on “What is exposure insurance?” Could help you gain more knowledge regarding money and insurance. That is all.