What Is Coercion In Insurance?

Are you studying insurance principles and came across the term coercion and asked, “What does coercion mean in insurance?” Coercion in insurance, as defined, is when someone forces a person to purchase insurance.

This type of coercion used to persuade someone to buy insurance against their will could be physical, mental, or psychological. In addition, coercion in the insurance industry is considered a prohibited business activity.

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 takes 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 of coercion in insurance.

What Does Coercion Mean?

According to the definition, “an unfair trading practice” happens when someone in the insurance business uses physical or mental coercion or the fear of force to compel another to transact insurance. However, coercion does not always have to be forceful.

What is an example of insurance coercion?, If an employee does not comply with an employer’s request and the employee’s rights are violated, the employer may threaten to fire the employee. When it comes to insurance, forcing someone to get insurance is a form of compulsion.

What are some examples of coercion? Also, what are some examples of coercion? Extortion, blackmail, torture, threats to induce favors, and even sexual assault are examples of these activities.

Finally, What is the theory of coercion? According to coercion theory, the coercive cycles are a primary mechanism producing aggressive behaviors. Coercion theory, therefore, describes the transactional processes that are a major precursor to a developmental trajectory of antisocial behavior.

What is an Example of Coercion in Insurance?

An employer may threaten to fire an employee if he or she does not engage in something he or she wants him or her to do and the employee’s rights get violated. In terms of insurance, it is a form of coercion if someone forces a person to buy insurance.

What is Coercion Example?

Threats to a person’s safety or well-being, or that of their families or possessions, are used to coerce them into doing something they would not ordinarily do. A real physical threat includes pointing a gun at someone’s head or holding a knife to someone’s throat.

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

Insurance coercion is similar to other forms of coercion that occur frequently in society. To get what they want, they employ threats and coercion to get the victim to do something against their will.

For example, an insurance company’s agent persuades a consumer to buy insurance from them. When the person they approached declined their offer, they used their position of authority to compel them to apply for 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

When coercing a person to buy insurance against their will, blackmail is one of the most common threats. The agent may inform the customer that if they do not get insurance from their company, someone will be harmed. As a result, the individual has no choice but to start the transaction in order to keep the person safe.

Take this example of an insurance agent who wants an employee to buy insurance from them to better understand how blackmailing is listed as one of the strategies to force an individual. When the employee refuses to comply, the agent will use different methods to persuade them.

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 feel 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.

FAQs

What is meant by coercion?

the act of coercing; use of force or intimidation to obtain compliance. force or the power to use force in gaining compliance, as by a government or police force.

What does coercion mean in medical terms?

The threat of kidnapping, extortion, force or violence to be used immediately or in the future, or the use of parental, custodial, or official authority over a child under age 15; the use of some form of force to compel a person into therapy, most commonly psychiatric—e.g., child psychiatry—or treatment of substance abuse.

What are the two types of coercion?

These actions may include extortion, blackmail, torture, threats to induce favors, or even sexual assault. In law, coercion is codified as a duress crime.

Conclusion

And those are the four concepts that you should know about 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 off-topic, but if you feel that you want to read more articles, then this one on “What is exposure insurance?” It could help you gain more knowledge regarding money and insurance. That is all.

Also Read:

What Is Coercion In Insurance?

What Does Coercion Mean?