Rebating: Why is Rebating Still Illegal in Many States?

[tlmarketing]

I just heard a rebating scheme from a florida broker yesterday using United of Omaha's UL contract.

They have 140% in the product, so these guys are running a program where they arranged private financing with a bermuda based company.

you as the insured take out a policy as large as possible, designed for a 1x dump in premium, gets you 12-13 years of coverage on the current assumption side..the bermuda company lends you the money to pay the premium. When the policy is put inforce, this broker gets paid the 140%, pays 100% to bermuda company which pays off the loan and gives bermuda another 10% for use of their money, and leaves the agent 30% commission.

 

[VolAgent]

And does the broker disclose the private financing to United of Omaha?

 

[LGilmore]

Kid, the one thing I think you are overlooking and it could be because you've been sold a bill of goods (like all of us were.), that people will be lining up to buy insurance from you. That people are out there just waiting to buy, but nobody's asked them or given a big enough discount.

A lot of guys here work on a mulit-state level. why? Because in order to pay their bills, they've had to expand their market boundries because in the 50 miles from their house, there's not enough business to make a decent living.

Again I wish you luck, but I think your expectations of how things are in this business aren't what they are in real life, even with discounts.

 

[mrpink]

Kid, the one thing I think you are overlooking and it could be because you've been sold a bill of goods (like all of us were.), that people will be lining up to buy insurance from you. That people are out there just waiting to buy, but nobody's asked them or given a big enough discount.

A lot of guys here work on a mulit-state level. why? Because in order to pay their bills, they've had to expand their market boundries because in the 50 miles from their house, there's not enough business to make a decent living.

Again I wish you luck, but I think your expectations of how things are in this business aren't what they are in real life, even with discounts.

Thanks LGilmore. I'm doing my best to be a sponge, talk to agents, read insurance blogs / insurance forum threads, and ask dumb questions. I've talked many "target" customers (and it was a process just to understand and decide who I should target) and learned pretty quickly they aren't going to line up to buy insurance.

Rebating is just one of many topics I'm trying to understand. The other issue I'm wrestling with is how much of the process can I optimize/improve with technology. Can I get someone 80 -90% there without human interaction? What have others tried to do? It's definitely a balance between formulaic/automated policy building/education and actually talking to a human (I'm calling it the last mile) to address nuanced situations. The tests I've done has produced interesting data but the biggest question remains: Is there more value handling the "last mile" in-house or giving it to someone else. And if you give it to someone else, what is the proper revenue model. I HATE the current internet lead gen model. I think it's a poor experience for both the consumer and agent.

 

[Guest]

dude, Mrs Pink, rebating is illegal, immortal, so get this out of yout thick skull....

If you are going into this business, do it right.

 

[tlmarketing]

And does the broker disclose the private financing to United of Omaha?

don't know...i'm guessing no

i would also bet that this wont work once they see the target premiums vs excess premiums

 

[VolAgent]

don't know...i'm guessing no

i would also bet that this wont work once they see the target premiums vs excess premiums

Ah. So they are rebating legally, but they are committing fraud on the app. Trading one crime for a more serious one. Way to go!

 

[mrpink]

dude, Mrs Pink, rebating is illegal, immortal, so get this out of yout thick skull....

If you are going into this business, do it right.

Luckily I also have a thick skin to go with the thick skull. I think rebating is an interesting topic worth having a discussion about. It's actually refreshing to see the impassioned replies in this thread.

It's understandable why a lot of agents are afraid (or downright terrified) of the consequences of legalizing rebating. It would completely change the entire insurance industry. That said, I realize rebating is a sideshow to the big picture issues both carriers and agents have to deal with.

 

[0b1kanobee]

I tell ya what.............why don't you go rebate and let us know how that works out for ya!

 

[LGilmore]

mrpink,

If you stick around this business long enough you don't have to worry about reduced commissions, the carriers take care of that for you.