NAIC Adopts Amendments to the Unfair Trade Practices Act Model Pertaining to Anti-Rebating

The NAIC Innovation and Technology (EX) Task Force met December 4th and discussed and adopted model law language amendments to the Unfair Trade Practices Act (#880) pertaining to anti-rebating.  The adopted amendments permit the offer or provision by insurers or producers, by or through employees, affiliates or third party representatives, of value-added products or services at no or reduced cost when such products or services are not specified in the policy of insurance if the product or service relates to the insurance coverage and meets certain other specified criteria.  By way of example, under the revised model language, an insurer or a producer may:

• Offer or provide value-added products or services at no or reduced cost when such products or services are not specified in the policy of insurance if the product or service:

(i) Relates to the insurance coverage; and

(ii) Is primarily designed to satisfy one or more of the following: (I) Provide loss mitigation or loss control; (II) Reduce claim costs or claim settlement costs; (III) Provide education about liability risks or risk of loss to persons or property; (IV) Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk; (V) Enhance health; (VI) Enhance financial wellness through items such as education or financial planning services; (VII) Provide post-loss services; (VIII) Incent behavioral changes to improve the health or reduce the risk of death or disability of a customer (defined for purposes of this subsection as policyholder, potential policyholder, certificate holder, potential certificate holder, insured, potential insured or applicant); or (IX) Assist in the administration of the employee or retiree benefit insurance coverage.

(iii) The cost to the insurer or producer offering the product or service to any given customer must be reasonable in comparison to that customer’s premiums or insurance coverage for the policy class.

(iv) If the insurer or producer is providing the product or service offered, the insurer or producer must ensure that the customer is provided with contact information to assist the customer with questions regarding the product or service.

(v) The availability of the value-added product or service must be based on documented objective evidence and offered in a manner that is not unfairly discriminatory.

• Offer 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, as long as the cost does not exceed an amount determined to be reasonable by the commissioner per policy year per term. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service.
• Offer or give non-cash gifts, items, or services including meals to or charitable donations on behalf of a customer, to commercial or institutional customers in connection with the marketing, sale, purchase, or retention of contracts of insurance, as long as the cost is reasonable in comparison to the premium or proposed premium and the cost of the gift or service is not included in any amounts charged to another person or entity. The offer must be made in a manner that is not unfairly discriminatory. The customer may not be required to purchase, continue to purchase or renew a policy in exchange for the gift, item or service.
• Conduct raffles or drawings to the extent permitted by state law, as long as there is no financial cost to entrants to participate, the drawing or raffle does not obligate participants to purchase insurance, the prizes are not valued in excess of a reasonable amount determined by the commissioner and the drawing or raffle is open to the public.

NAIC Executive Committee adopted the amendments at its Committee Meeting on December 9th.

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