NAIC Adopts Changes to Rebating Model
The National Association of Insurance Commissioners’ (NAIC) Executive Committee has adopted language that would allow for some types of “rebates” to be offered to consumers, unanimously approving amendments to Section 4(H) (“Rebating”) of the NAIC Unfair Trade Practices Act (Model #880). The revised language will permit insurers or producers to “[o]ffer or give non-cash gifts, items, or services, including meals to or charitable donations on behalf of a customer, in connection with the marketing, sale, purchase, or retention of contracts of insurance ...” The amendment leaves open the possibility of a cap on gift amounts to be determined by the state commissioner. The NAIC’s Innovation and Technology Task Force has been working on the rebating issue since 2018.
PIA served on the drafting group and recommended edits throughout the process. Many of those suggestions were taken, but not all of them; still, we are comfortable with the new version. The newly revised Unfair Trade Practices Act (UTPA) still limits rebating, just not as dramatically as it did before. The UTPA is just a model; individual states are free to choose how much, if any, of the new language to integrate into their existing law.
States have a patchwork of different rebating rules and laws, only some of which emanate from the UTPA. States’ current regulatory and statutory structure governing rebating will inevitably influence the degree to which—and the way—they adopt these changes.