Rebating & Gifts

While giving gifts to customers is customary in many industries, this practice can lead to ethical problems. For this reason, gift-giving or rebating is generally forbidden in the insurance business. Rebating involves the giving or promising of a valuable consideration intended to be an inducement to the buyer to purchase an insurance policy. The inducement may be cash or any other item of value.

In Florida, any rebates must be uniformly offered to all prospects in the same actuarial class — the agent may not “pick and choose” which clients are offered rebates. The size of the rebate must also be uniform among those receiving it, though the schedule may allow differences between policies of different sizes or members of different actuarial classes — as long as factors such as race, age, sex, marital status, residence, or occupation are not used to distinguish the classes.

Agents must file a copy of the rebating schedule with the carrier prior to offering rebates on policies issued by that carrier. All rebates given must be consistent with the filed schedule. If an insurer prohibits rebating on policies it underwrites, the agent may not rebate any portion of his or her commission earned from that company.

Gifts of nominal value are permitted under Florida law, with some restrictions. Agents and companies may, for advertising purposes, provide applicants with gifts valued up to $100. The Department of Financial Services defines gifts as “articles of merchandise.”

Rebating — returning a portion of a commission as an inducement to apply for insurance — is permitted in Florida in very limited circumstances under Florida Statute 626.572: