Rebating and illegal inducements | Washington state Office of the Insurance Commissioner
Insurers and insurance producers may implement advertising or promotional programs that allow the award of prizes, goods, items, gift cards, gift certificates, or merchandise not to exceed $100 in total value per person in any one period of time. 12 months. The advertising or promotional program must be offered to all policyholders or potential policyholders under similar qualifying circumstances.
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see rcw 48.30.140 and rcw 48.30.150 (leg.wa.gov).
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The advertising or promotional program must be rationally related to the business of the insurer or producer. The insurer or producer must implement record-keeping processes in order to provide evidence that the $100 per person limit has not been exceeded for any consecutive 12-month period.
1. An insurance producer provides a flower arrangement for the funeral services of the insured’s spouse. this is the grower’s practice whenever the spouse or other close relative of the insured dies where the insured had insurance through them with a total annual premium of $5,000 or more. the gift of this flower arrangement appears to be a component of an advertising or promotional program covered by the exception to the anti-discount and illegal inducement statutes. the criteria for submission is rationally related to a legitimate business purpose and appears to be offered to all policyholders who meet the criteria. therefore, it is permissible if the value of the flower arrangement, taking into consideration the value of any other prizes, property, merchandise, gift cards, gift certificates, or merchandise given to the insured customer during a 12-month period, does not exceed $100 in value for that 12-month period.
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see rcw 48.30.140(4) (leg.wa.gov).
2. An insurance producer returns a portion of the fee charged to its insured client.
as stated, this appears to be a rebate and is a violation of anti-refund and illegal inducement statutes. but if the producer receives a commission along with the canon, he may compensate or reimburse the insured for all or part of the canon. An explanation of any compensation or reimbursement must be provided on the compensation disclosure form at the time the fee is collected.
see rcw 48.17.270 (2)(c) and (3)(c) and rcw 48.30.140(5) (leg.wa.gov).
3. An insurance producer offers to give away an iPad to the 100th person who requests an insurance coverage quote. This is not allowed because the value of the iPad exceeds $100.
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see rcw 48.30.150(1)(c) (leg.wa.gov).
4. An insurance producer gives new leads a $50 gift card. This is allowed, but the producer must keep track of how much each lead receives to ensure the $100 limit on insurance is not exceeded. total over the 12-month period for each lead who receives a gift card or other prize, merchandise, etc.
see rcw 48.30.150(3) (leg.wa.gov).5. an insurance producer takes his insured client, along with the client’s family (spouse and two children) to dinner and pays his share of the bill totaling $350. this would be allowed if the value of the dinner from any person did not exceed $100 and if the producer had not previously provided, during the preceding 12-month period, to the client and any of the client’s family members who dined at the producer’s expense, prizes , property, merchandise, gift cards, gift certificates, or merchandise that, when added to the value of each dinner, results in a total value greater than $100. In addition, the payment for the dinner of the insured and their families must be part of a promotional program that the producer offers to all insured under similar qualifying circumstances.
see rcw 48.30.140(4) (leg.wa.gov).6. An insurance producer writes a large business policy for a company and gives the leadership team tickets to a sporting event. the value of each ticket is $75. this would be allowed if the producer had not previously provided, during the prior 12-month period, leadership team members with prizes, items, merchandise, gift cards, certificates gift or merchandise that, when added to the value of the member’s ticket, results in a total value greater than $100. in addition, giving tickets to sporting events to leadership teams of commercial business clients must be part of a promotional program that the producer offers to all policyholders under similar qualifying circumstances.
see rcw 48.30.140(4) (leg.wa.gov). Please note that the cost of the ticket may not be the only factor in determining its value.