Summary
Insurers and insurance producers may implement advertising or promotional programs that permit the giving of prizes, goods, wares, gift cards, gift certificates or merchandise not exceeding $100 in value in the aggregate per person in any 12-month period. The advertising or promotional program must be offered to all insureds or prospective insureds under similar qualifying circumstances.
See RCW 48.30.140 and RCW 48.30.150 (leg.wa.gov).
Guidelines
The advertising or promotional program must be rationally related to the business of the insurer or producer. The insurer or producer should implement record-keeping processes to be able to provide evidence that the $100 per-person limit for any consecutive 12-month period has not been exceeded.
Examples
1. An insurance producer provides a floral arrangement for the funeral services of the spouse of the insured. This is the producer's practice whenever an insured’s spouse or other close family member dies where the insured had insurance through them with an annual premium totaling $5,000 or more.
The gifting of this floral arrangement appears to be a component of an advertising or promotional program contemplated by the exception to the anti-rebating and illegal inducement statutes. The criteria for sending it is rationally related to a legitimate business purpose and appears to be offered to all insureds who fit the criteria. Thus, it is permitted if the value of the floral arrangement, taking into consideration the value of any other prizes, goods, wares, gift cards, gift certificates or merchandise given to the insured client during a 12-month period, does not exceed $100 in value for that 12-month period.
See RCW 48.30.140(4) (leg.wa.gov).
2. An insurance producer gives back a portion of the fee charged to their insured client.
As stated, this appears to be a rebate and is a violation of the anti-rebating and illegal inducement statutes. But if the producer receives a commission along with the fee, they may offset or reimburse the insured all or a part of the fee. An explanation of any offset or reimbursement should be provided on the compensation disclosure form at the time the fee is charged.
See RCW 48.17.270 (2)(c) and (3)(c) and RCW 48.30.140(5) (leg.wa.gov).
3. An insurance producer offers to give the 100th person who comes in for a quote on insurance coverage a free iPad.
This is not permitted because the value of the iPad exceeds $100.
See RCW 48.30.150(1)(c) (leg.wa.gov).
4. An insurance producer gives prospective new clients a $50 gift card.
This is permitted, but the producer should keep a record of how much each prospect receives to ensure the $100 limit in the aggregate is not exceeded during the 12-month period for each prospect receiving a gift card or other prize, goods, etc.
See RCW 48.30.150(3) (leg.wa.gov).
5. An insurance producer takes their insured client, along with the client’s family—spouse and two children—to dinner and picks up their part of the tab totaling $350.
This would be permitted if the value of any person’s dinner did not exceed $100 and if the producer had not previously—during the preceding 12-month period—provided the client and any of those members of the client’s family who dined at the producer’s expense, any prizes, goods, wares, gift cards, gift certificates or merchandise that, when their value is added to the value of each’s dinner, results in a total value in excess of $100. In addition, paying for the dinner of insureds and their families must be part of a promotional program that the producer offers to all insureds under similar qualifying circumstances.
See RCW 48.30.140(4) (leg.wa.gov).
6. An insurance producer writes a large commercial policy for a business and gives the leadership team tickets to a sporting event. The value of each ticket is $75.
This would be permitted if the producer had not previously—during the preceding 12-month period—provided members of the leadership team any prizes, goods, wares, gift cards, gift certificates or merchandise that, when their value is added to the value of the member’s ticket, results in a total value in excess of $100. In addition, giving sporting event tickets to leadership teams of commercial business clients must be part of a promotional program that the producer offers to all insureds under similar qualifying circumstances.
See RCW 48.30.140(4) (leg.wa.gov). Please note that the cost of the ticket may not be the sole factor in determining its value.
New York State Gov. Andrew Cuomo signed a bill this month that allows property/casualty insurers, brokers and agents to give gifts worth up to $25 to insureds or prospective clients during the insurance sales process.
The new law amends the existing anti-rebating provisions. Rebating, lowering commission or offering any valuable consideration or inducement for insureds or prospective clients have traditionally been prohibited in the state — with the only exception being keepsake gifts valued at less than $15.
The new law also removes the previous restriction that such gifts must have “conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker.” Under the new law, the merchandise need not be strictly promotional for the insurer, agent or broker.
The new, amended law is as follows. Newly added parts in the law are in capital letters. Portions that have been removed from the previous law are in brackets:
“No authorized insurer, no licensed insurance agent, no licensed insurance broker, and no employee or other representative of any such insurer, agent or broker shall make, procure or negotiate any contract of insurance other than as plainly expressed in the policy or other written contract issued or to be issued as evidence thereof, or shall directly or indirectly, by giving or sharing a commission or in any manner whatsoever, pay or allow or offer to pay or allow to the insured or to any employee of the insured, either as an inducement to the making of insurance or after insurance has been effected, any rebate from the premium which is specified in the policy, or any special favor or advantage in the dividends or other benefit to accrue thereon, or shall give or offer to give any valuable consideration or inducement of any kind, directly or indirectly, which is not specified in such policy or contract, other than any [article of] VALUABLE CONSIDERATION, INCLUDING BUT NOT LIMITED TO merchandise OR PERIODICAL SUBSCRIPTIONS, not exceeding [fifteen] TWENTY-FIVE dollars in value [which shall have conspicuously stamped or printed thereon the advertisement of the insurer, agent or broker], or shall give, sell or purchase, or offer to give, sell or purchase, as an inducement to the making of such insurance…”
Topics Legislation Agencies New York
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