Can someone please explain insurance rebates and incentives.?

Question

I am wondering what the differences in rebates and incentives are concerning insurance sales and solicitation. Can someone please explain the differences between the two with pretty in-depth detail and examples. I am wanting to utilize a customer referral program with incentives, but I want to make sure that I don't go over the line to rebates. Thanks in advance for any help.

Answer 1

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Answer 2

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Answer 3

A rebate is an illegal inducement to purchase a policy. In it's simplest terms it would be offering to rebate some of your commission to the client in order to secure the order.

An incentive on the other hand might be offering a road atlas to provide a quote on someones auto and home insurance. The prospect gets the incentive by agreeing to get the quote irrespective of whether or not they purchase the policy. Hartford/AARP does this all the time offering a clock or a calculator.

However, you are right to be cautious because if the incentive becomes too valuable you could drift in to what might be an illegal rebate.

Answer 4

rebates& incentives are not legal its know as twisting

insurance.

Answer 5

They're different words.  Rebates are usually defined as offering a gift, promotion, money back, or other such thing, in exchange for buying an insurance policy.  Rebating is illegal.  

Any incentive that does the above, is also illegal, but an attempt to get around the rebating laws.  

You can't give money, or commission, for a referral, to someone who doesn't have a license to sell that line of insurance.  

Check with your local independent agent association office, ask for their legal department.    Describe your program in great detail, and ask them if they think you're in accordance with the state law (which you don't specify!).