Rebating & Referral Fees

It is unlawful for an insurer or a licensed agent to pay any rebate of premium or commission or any other valuable consideration or inducement to any person or organization for the solicitation or negotiation of contracts of insurance, unless that person is licensed.

However, there is now one exception. In the 83rd Session of the Texas Legislature, the Insurance Code (Sec. 1806.1541) was amended. It now allows an insurer or an agent to provide a customer or potential customer a promotional advertising item, educational item or traditional courtesy commonly extended to consumers if the item is valued at $25 or less, even when it is an inducement to purchase insurance..

TDI issued Commissioner's Bulletin #B-004-08 to address how the anti-rebating law applies to the practice of providing some types of services to policyholders without additional charge.

It is permissible for a licensed agent to pay a referral fee or other consideration to another person, if the unlicensed person does not discuss "specific insurance policy terms or conditions with the customer or potential customer" and the referral fee or other consideration is not "based upon the purchase of insurance" by the customer. Licensed agents are now free to pay for leads furnished by real estate agents, car dealers and others.

Also, see Contest, Giveaways and Sweepstakes

References: (Texas Insurance Code)