What practice involves replacing an existing policy for the purpose of generating new commissions?

Churning refers to the practice of replacing an existing insurance policy with a new one primarily for the purpose of generating commissions for the agent, rather than for the benefit of the policyholder. This can occur when agents persuade clients to surrender or replace their current policies, even though it may not be in the clients' best interests. Churning is typically discouraged as it can lead to unnecessary costs for the policyholder, including new premiums, fees, and potential loss of coverage benefits.

Understanding churning is essential in the context of insurance regulations and ethics, as it highlights the importance of agents prioritizing their clients' needs over their own financial gain. This practice is monitored closely by insurance regulators to protect consumers from exploitative behavior.