Getting to Know Churning, Pooling, and Twisting in Insurance ~ Insurance Academy

Have you ever heard the terms Churning, Pooling and Twisting? These three terms appear in SE OJK Number 19/SEOJK.05/2020 concerning Insurance Product Marketing Channels.

Churning is the act of a party marketing an Insurance Product that persuades and/or influences policyholders to change or replace an existing Insurance Policy with a new Insurance Policy at the same Company, and/or purchase a new Insurance Policy using funds from an Insurance Policy that is still from the same company without prior explanation to the policyholder regarding the losses that the policyholder may suffer as a result of the change/replacement.

For example: An agent A of ABC Company persuades client X to cancel X’s insurance policy at a certain price and reissue it in ABC company but using agency A.

Pool is the act of diverting sales of Insurance Products that have been carried out by Insurance Agents, or parties who market Insurance Products to other parties.

For example, insurance company ABC records the business of Agent A as the production of Agent B on the grounds that Agent B is the leader of Agent A.

Twisting is the act of a party marketing an Insurance Product that persuades and/or influences policyholders to change the specifications of an existing Insurance Policy or replace an existing Insurance Policy with a new Insurance Policy at another Company, and/or purchase a new Insurance Policy using funds originating from An Insurance Policy that is still active in another Company within a period of 6 (six) months before or after the date a new Insurance Policy in another Company is issued.

Example: Broker A asks insured X to cancel the policy on a prorated basis at ABC Insurance, and the prorated premium is used to buy a policy in DEF insurance through broker A. (ABP)

Source of Terms: SE OJK Number 19/SEOJK.05/2020

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