BULLETIN NO. 2025-01

The purpose of this bulletin is to inform and clarify to all producers and insurers, subject to the jurisdiction of the Insurance Commissioner, of the anti-rebating statute as it relates to the negotiation between the producer and the insured or the producer and the insurer for the returning of any portion of commissions or premiums.

It has been brought to the attention of the Oklahoma Insurance Department that producers and insurers may be negotiating the return of some or all commissions from the sale of a product to the insured to write new and renewal insurance accounts.  State law prohibits insurers and producers (or others acting on their behalf) from offering to provide a rebate of premium or any other valuable consideration that is not specified in the policy.

Pursuant to 36 O.S. § 1204(8)(a):

Except as otherwise expressly provided by law, knowingly permitting or offering to make or making any contract of insurance or agreement as to such contract other than as plainly expressed in the contract issued thereon; or paying or allowing, or giving or offering to pay, allow or give, directly or indirectly, as inducement to any contract of insurance, any rebate of premiums payable on the contract, or any special favor or advantage in the dividends or other benefits thereon, or any valuable consideration or inducement whatever not specified in the contract; except in accordance with an applicable rate filing, rating plan or rating system filed with and approved by the Insurance Commissioner; or giving or selling or purchasing or offering to give, sell, or purchase as inducement to such insurance, or in connection therewith, any stocks, bonds or other securities of any company, or any dividends or profits accrued thereon, or anything of value whatsoever not specified in the contract or receiving or accepting as inducement to contracts of insurance, any rebate of premium payable on the contract, or any special favor or advantage in the dividends or other benefit to accrue thereon, or any valuable consideration or inducement not specified in the contract. (Emphasis added)

Anti-Rebating statutes are generally aimed at preventing discriminatory practices and ensuring uniformity in insurance rates. Whether a returned commission is negotiated between the producer and the insured or the producer and the insurer in the form of a reduced premium, the practice of returning any portion of commissions in the furtherance of securing and/or retaining insurance business, regardless of how that returned commission is to be used, directly or indirectly to the benefit of the insured, is rebating and violates the unfair trade practice laws.

Nothing in this Bulletin should be interpreted as superseding the exceptions under 36 O.S. § 1204(8)(b).

Questions concerning this bulletin should be directed to the Oklahoma Insurance Department’s Legal Division at 405-521-2746 or by email to Tyler.Trammell@oid.ok.gov.