Is rebating illegal in California?

[Peachy]

I received a letter in my mail from an insurance agent trying to get some homeowner business. Pretty standard letter but he had a little graphic that said he would give me a $25 gas card if he wrote my home AND auto insurance.

I thought it was a good way to write multiple lines and thought about copying it. But I'm thinking there's a chance that would be considered rebating. I've tried searching but it seems like there is some gray area on what exactly rebating is. And more gray area on whether it is illegal in California.

Can someone point me to where I can find out for sure? I looked at our DOI website but not finding a great way to contact them.

 

[TXINSURANCE]

It is legal in a lot of states up to a certain amount, while other states it is illegal at any amount.

Call the DOI direct and ask them, the websites are hard to figure out.

 

[djs]

Calling the DOI is the best advice, but, what I've always been told is that this is not legal in California. You can give the $25 gas card for the opportunity to quote both home and auto, but not based on writing them.

I would also assume that paying the insured for business will end up being bad business. You are selling only rates at that point, as soon as something cheaper comes along (me), you'll lose the household. It would probably work well if you are wanting a production bonus of some sort, and don't get caught.

Beyond the DOI, many carriers also discourage any form of rebating. I say discourage only because they will cut you off at the throat if you get caught, but won't say a thing until you do, since it's to their benefit.

Dan

 

[TXINSURANCE]

You can give the $25 gas card for the opportunity to quote both home and auto, but not based on writing them.

You can pay based on the quote - if you want to go broke real fast.

You can also pay based on a submitted application, approved or declined, to a third party.

Ehealth pays non licensed agents $40 to $60 or so per submitted app. This is their entire business model.

The difference is it is not the consumer getting the payout - it is the affiliate.

 

[rocketboy]

Can you pay an affiliate commission only if the application gets approved?

 

[TXINSURANCE]

Can you pay an affiliate commission only if the application gets approved?

I don't believe so, which is why Ehealth pays on submission. I wonder if I sent them all diabetics and morbidly obese if they would eventually pull my affiliate contract?

 

[mickeyma]

There was an insert in the L.A. Times from a life insurance agent offering cash rebates. I heard the DOI put a stop to it. Never saw the insert again.

 

[Dave020]

Last I knew, rebating was "discouraged" in California, but not specifically prohibited by law.

 

[Dave020]

To further clarify, in California rebating was illegal until the passage of Prop 103, which made it legal to offer rebates on insurance, and further allowed punishment of insurers who blackballed rebating agents. No further rules have been put in place by DOI and any other authority to make rebating illegal in California.

 

[moonlightandmargaritas]

Can you pay an affiliate commission only if the application gets approved?

Only if they're licensed producers.