Two General New Agency Questions

[Todd King]

1. While it does not seem that "rebating" or "inducement" are illegal in CA, some of the companies may look at it differently.

2. When it comes to company logos, just get permission from the company. Many of the companies just want to take a look at your website before they approve it so they can make sure you're not doing anything out of compliance.

 

[AnonymusInsuran]

Try searching on the CA DOI website for "anti-rebating" or "illegal inducements" and you'll find links regarding issues with Title companies. Rebating happens AFTER a sale, while inducements are BEFORE the sale.

I'm not saying that an agent can't do rebating/inducements in California. I only said to check with your company compliance.

I searched for "inducement" and "illegal" and here's what came up:


Codes: Text Search


"
Insurance Code - INS
DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.5]
( Division 2 enacted by Stats. 1935, Ch. 145. )
PART 6. INSURANCE COVERING LAND [12340 - 12661]
( Part 6 enacted by Stats. 1935, Ch. 145. )
CHAPTER 1. Title Insurance [12340 - 12418.4]
( Chapter 1 enacted by Stats. 1935, Ch. 145. )

ARTICLE 6. Rebates and Commissions [12404 - 12413.5]
( Article 6 added by Stats. 1949, Ch. 891. )

12404.
(a) It is unlawful for any title insurer, underwritten title company or controlled escrow company to pay, directly or indirectly, any commission, compensation, or other consideration to any person as an inducement for the placement or referral of title business. Actual placement or referral of title business is not a precondition to a violation of this section, whether the violation is or is not a per se violation pursuant to subdivision (c).

(b) For purposes of this section, the following definitions are applicable:

(1) “Compensating balance” is a balance maintained in a lending institution by any title insurer, underwritten title company, or controlled escrow company for the express or implied purpose of influencing the extension of credit to a third party or the provision of goods, services, or benefits to a third party as an inducement for the placement or referral of title business by a third party.

"

That's the closest I can find, based on "Title Insurer, Underwritten Title Company and "controlled escrow company" - it would seem it would not apply to Brokers/Agents?

Thank you again.

 

[AnonymusInsuran]

That's called rebating. Ask your various company compliance departments.

I've heard (on these forums) that it's legal to rebate in California. I've never been able to prove it or disprove it. I do remember my L&H licensing class saying that you can't do it.

Using the correct term will at least help you get more direct information, more precise searches, or at least you can search some CE courses about it for California specifically.

"Insurance Code - INS
DIVISION 2. CLASSES OF INSURANCE [1880 - 12880.5]
( Division 2 enacted by Stats. 1935, Ch. 145. )
PART 2. LIFE AND DISABILITY INSURANCE [10110 - 11549]
( Part 2 enacted by Stats. 1935, Ch. 145. )
CHAPTER 5. General Regulation of Life Insurers [10430 - 10509.938]
( Chapter 5 enacted by Stats. 1935, Ch. 145. )

ARTICLE 1. Restrictions on Business [10430 - 10436]
( Article 1 enacted by Stats. 1935, Ch. 145. )

10431.
A life insurer which, as an inducement to insurance, issues or permits its agents, officers, or employees to issue any such securities or contracts in this State or any other State shall not be admitted."

Correct, it seems for Life one can't "Induce" and form of consideration. But as mentioned I'm still looking for Commercial lines etc...