Which situation is classified as rebating?

Rebating refers to the practice where an insurance producer (or agent) gives back part of their commission to the insured as an incentive to purchase an insurance policy. This practice is generally prohibited in many states, including Kansas, because it can create an unfair competitive advantage and undermine the integrity of the insurance market.

In the context of the question, when a producer returns a portion of a commission to the insured, it directly reflects the pricing advantage intended to entice the customer, therefore, it’s classified as rebating. This stands in contrast to providing policy discounts, which are legitimate sales practices governed by insurance regulations, where the price of the policy is adjusted based on various factors like loyalty or claims history. Sponsoring health education programs and offering free consultations are also acceptable business practices that do not involve returning commissions or providing financial benefits directly tied to the purchase of a policy, thus they do not fall under the definition of rebating.