What is an example of rebating in the insurance industry?

Rebating in the insurance industry refers to the practice of providing something of value to a prospective client as an incentive to purchase an insurance policy. This often involves sharing or splitting commissions that an agent receives with the buyer.

When an insurance agent splits their commission with a buyer, it directly benefits the buyer financially, which is classified as rebating. This practice is typically prohibited in many jurisdictions due to the potential for misleading or unfair practices. The intent behind the prohibition is to ensure that insurance decisions are made based on the merits of the products being offered rather than financial kickbacks.

In contrast, offering discounts on future premiums, providing a free policy for referrals, or paying a fee for initial consultations might involve promotional tactics that do not fit the strict definition of rebating, as they do not involve sharing the commission earned on the sale directly with the consumer.