N.J. Admin. Code § 11:17A-2.3 - Rebates and inducements; prohibited practices

(a) No insurance producer shall offer, make or give, or permit to be offered, made or given, to any person directly or indirectly, an inducement to purchase insurance other than that plainly expressed in the insurance contract.

(b) No insurance producer shall offer, pay or give, or permit to be offered, paid or given, to any person, directly or indirectly, any rebate of premiums payable on a contract of insurance, other than that plainly expressed in the contract or provided for in ratings systems filed by or on behalf of the insurer writing the contract and approved by the Commissioner.

(c) No insurance producer shall offer, pay or give, or permit to be offered, paid or given, to any person, directly or indirectly, anything of value in return for that person's agreement not to purchase insurance from another insurance producer or insurer.

(d) No insurance producer shall offer, pay or give, or permit to be offered, paid or given, to any person, directly or indirectly, anything of value as compensation for being unable to offer a comparable or better insurance program at less cost.

(e) The provisions of this section shall apply whether or not a contract of insurance is ultimately effected.

(f) An offer by an insurer or insurance producer to make a contribution to a charity that is a qualified organization under the guidelines of the Internal Revenue Service, a non-profit corporation, or to the State of New Jersey or any political subdivision thereof, or to any state government or political subdivision thereof, upon a consumer, other than the charity, non-profit corporation, or governmental entity itself, agreeing to purchase an insurance product shall not be deemed to be an inducement or a rebate prohibited by this section, provided that:

1. No pecuniary benefit is obtained by the insurer or producer, other than the income tax benefit of such contribution;

2. No income tax benefits are passed through to the consumer by the insurer or producer making the contribution, and the consumer does not receive the contribution and has no direct or indirect interest in the recipient of the contribution;

3. The amount of premium or commission to be charged is not altered as a result of the contribution;

4. Records of all such offers and contributions made are maintained for at least five years in a manner set forth in N.J.A.C. 11:17C-2.6, and are available to the Department for review and inspection upon request; and

5. The provisions of this subsection shall not apply to insurers authorized to transact title insurance and to insurance producers transacting title insurance business.

(g) The prohibitions against rebates and inducements set forth in (a) through (f) above shall not be deemed to prohibit the provision to a person by an insurance producer of services or other offerings for free or at a discounted price and in a fair and non-discriminatory manner, provided that the service(s) or other offering(s) relate to or enhance the value of the insurance product being purchased. Services and other offerings that would not be prohibited include, but are not limited to:

1. Discounts on gym memberships or wellness programs in connection with life, accident, health, workers' compensation, or sickness insurance products;

2. Claims filing assistance, including group health insurance assistance services;

3. COBRA, Health Reimbursement Arrangement (HRA), Health Savings Account (HSA), and Flexible Spending Account (FSA) administration;

4. Risk management services, including loss control; and

5. Product audits to assist policyholders to evaluate their current policies.

(h) Services or monetary benefits provided for free or at a discounted price that inure to the personal benefit of the person and that are largely extraneous to the coverage being purchased or the insurance services being provided by an insurance producer, or services offered in a discriminatory manner as an inducement to write or move business shall be deemed a prohibited rebate(s) or inducement(s). Examples of such services or benefits that the Department would consider prohibited rebates or inducements include:

1. Payments of cash or cash equivalents of greater than $ 100.00;

2. Provision of tickets to a concert or event with a value greater than $ 100.00; and

3. COBRA-, HRA-, HSA-, and FSA-administration services offered only to new customers who agree to change producers or insurers, which are not otherwise provided to in-force accounts.

Notes

N.J. Admin. Code § 11:17A-2.3

Amended by 49 N.J.R. 3607(a), effective 11/20/2017