What action is considered rebating by an insurance agent?

Rebating is the practice of returning a portion of the premium or commission to a policyholder as an inducement to purchase an insurance policy. This practice is generally prohibited because it can distort the true value of the insurance product and create an unfair marketplace. When an insurance agent splits commissions with a policyholder who has purchased additional coverage, it falls under this definition of rebating. The act of sharing or returning a portion of the financial benefit gained from the sale of insurance undermines the integrity of the transaction and may lead to ethical concerns about how policies are marketed and sold.

In contrast, offering policy discounts is typically a standardized practice built into some insurance products; it does not represent a return of commission or premium for the purpose of inducing a sale. Similarly, providing free consultations is a common service offered by agents to help clients understand their options and does not involve any financial transaction that would be classified as rebating. Gifting promotional items is also generally allowed as a marketing practice, as long as the items are not considered to be excessive in value or given as an inducement to purchase a policy.