The NAIC Executive Committee unanimously adopted an amendment to the NAIC Unfair Trade Practices Model Act (Model Law #880) on December 9, 2020. This amendment will allow insurers and producers to “rebate” consumers. With the exception of California and Florida, and until most recently, states have enforced strict anti-rebating laws, considering non-compliance as a serious violation of the law. Within the last 2 years, 14 states have proposed or adopted new legislation, rules or bulletins addressing their anti-rebating prohibitions.
The amendment, which the NAIC Innovation and Technology Task Force has worked on since 2018, will permit insurers and producers to “offer or give non-cash gifts, items or services, including meals to or charitable contributions on behalf of a customer, in connection with the marketing, sales, purchases, or retentions of contracts of insurance.” There is no cap on the value of such rebated gifts, but rather the decision is being left to the state insurance commissioners.
The NAIC received comments from both those favoring the amendment and those opposed to the broad scope of the amendment.