Nebraska Guideline Update on Rebates and Inducements
The Nebraska Department of Insurance has revised regulations concerning rebates and inducements to include that interest-free credit on life and liability insurance premiums are not considered a rebate of premium and are not in violation of the law prohibiting rebates.
Additionally, the existing exceptions to the regulations have been expanded to include the offer of value-added products or services, by the company, its agents or third-party representatives, at no or reduced cost, even when those products or services are not specified in the insurance contract.
The valued added products or services must relate to the insurance coverage; be offered in a manner that is not unfairly discriminatory and be primarily related to:
- provide loss mitigation or loss control;
- reduce claim costs or claim settlement costs;
- provide education about liability risks or risk of loss to persons or property;
- monitor or assess risk, identify sources of risk or develop strategies for eliminating or reducing risk;
- enhance health;
- enhance financial wellness through items such as education or financial planning services;
- provide post-loss services;
- incentivize behavioral changes to improve the health or reduce the risk of death or disability of customer; or
- assist in the administration of employee or retiree benefit insurance coverage.
If the producer does not have sufficient evidence but believes that the product or service meets the above criteria, they may provide the product or service as part of a pilot or testing program for not more than one year, as long as it is done so a manner that is not unfairly discriminatory.
The company must notify the Nebraska Department of Insurance before launching the program and may proceed if the Department does not object within 21 days.
A company, or its agent, may offer or give noncash gifts, items, or services 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 Director of Insurance. Examples of acceptable gifts or services include meals to or charitable donations on behalf of a customer. The offer must be made in a manner that is not discriminatory and must not be based on the purchase or renewal of a policy.
A company or its agents may conduct drawings or raffles to the extent permitted by state law, as long as there is no financial cost to entrants, 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 Department of Insurance and the drawing or raffle is open to the public.
If you have a hierarchy of producers, you must share this e-mail with any producers who may not have received it.
If you have questions regarding this compliance update, please contact the Nebraska Department of Insurance at (402) 471-2201.