On December 4th, 2020 the NAIC issued a revised Model Law addressing Unfair Trade Practices, which has adopted some baseline language regarding rebates. This Model Law does not have binding authority. States may now respond to this Model Rule by choosing to adopt, or not.
For both traditional and institutional consumers, the Model Law permits insurers and producers to offer non-cash gifts, items, or services in connection with marketing, purchase, or other sale of insurance contracts. Insurers and producers must not exceed value amounts deemed “reasonable” by the DOI Commissioner in a given policy year term. Additionally, offers must not require continued purchase or renewal of policies as a condition of gift, item, or service receipt.
The Model Law also permits Insurers and Producers to conduct raffles to the extent permitted by State laws, so long as there remains no financial cost to enter in the raffle, and so long as the prizes are not value in excess of “reasonable” amounts as determined by the Commissioner.
Westmont will be tracking this matter and will follow-up with any new developments. For more information on this Model Rule, or any other regulatory compliance matter, please contact Westmont Associates, Inc.