Minnesota Updated Guidelines Related to Rebates and Value-Added Products or Services
The Minnesota legislature has updated guidelines related to insurance rebates and the offering of value-added products or services in connection with the marketing and purchase of insurance.
Insurance companies and producers are not permitted to knowingly offer to make, or make, any life insurance policy, annuity or other insurance policy, other than as plainly expressed in the policy contract.
The company is also prohibited from paying or offering to pay any rebate of premiums payable on the policy as inducement to purchase a policy.
The company is also not permitted to give, sell, or purchase, any stocks, bonds or other securities of any company or other corporation or any dividends or profits accrued, or anything of value not specified in the policy as an inducement to the policy or annuity.
Companies or producers may offer value-added products or services at no or reduced cost when these products/services relate to the insurance coverage and are designed to satisfy one or more of the following:
• Provide loss mitigation or loss control;
• Reduce claim or claim settlement costs;
• Provide education or develop strategies for eliminating or reducing risk of loss to persons or property;
• Enhance health or financial wellness through education or financial planning services;
• Provide post-loss services;
• Incent behavioral changes to improve the health or reduce the risk of death or disability;
• Aid in the administration of an employee or retiree benefit insurance coverage.
The availability of the value-added product or service must be based on documented objective criteria; and cannot be offered in a way that is not unfairly discriminatory.
Additionally, the cost of the product/service must be reasonable in comparison to that customer’s premiums or insurance coverage for the policy class.
If the company or producer does not have sufficient evidence but has a good-faith belief that the product/service meets the criteria set out above, the company/producer can provide the product or service as part of a pilot or testing program for no more than one year. The company/producer must notify the commissioner of the pilot program before launch and can proceed with the program unless the commissioner objects within 45 days.
The company or producer can offer or give noncash gifts such as meals or charitable donations on behalf of a customer, in connection with the sale or retention of insurance, if the cost is the lesser of 5% of the current or projected policyholder premium or $250 per policy year per term. The noncash gift must be made in a way that is not unfairly discriminatory and customer may not be required to purchase or renew a policy in exchange for the gift.
For commercial or institutional customers, the noncash gifts or services must be valued at a reasonable amount when compared to the premium or proposed premium.
Companies or producers can conduct raffles or drawings to the extent permitted by Minnesota law, if there is no financial cost to participate, there is no obligation to purchase insurance and the prizes as the valued at the lesser of 5% of the current or projected policyholder premium or $500.