Insurance Rebate Reform Model Act

The bill creates the "Model Rebate Reform Act" to modernize the law concerning insurance rebates by recognizing new insurance products while maintaining necessary consumer protections. The bill allows an insurer or insurance producer to give a gift valued under $250 in connection with the marketing, purchase, or retention of an insurance contract and to conduct a free raffle or drawing with prizes valued up to $500. Additionally, the bill provides that an insurer or insurance producer may give a free or discounted product or service in conjunction with or related to an insurance contract if the product or service:

• Is intended to educate about, assess, monitor, control, mitigate, or protect an individual against loss of life, health, or property; or
• Has a nexus to or enhances the value of the insurance benefits.

Next, the bill provides that an insurer or insurance producer may provide an additional free or discounted service if the service is at least tangentially related to an insurance contract or the administration of an insurance contract, the receipt of the service is not contingent on the purchase of insurance, and the service is offered on the same terms to all potential insurance customers. Before the purchase of insurance, receipt of a quote for insurance, or designation of an agent of record, the insurer or insurance producer providing the service shall disclose in writing to the recipient that receipt of the service is not contingent on the purchase of insurance. Lastly, the bill permits the commissioner of insurance to adopt rules as necessary to effectuate the provisions of the bill, including adjusting the financial limitations on gifts and prizes as necessary for inflation. The bill creates additional framework for insurance rebate law to allow usage of insurance rebates and related practices in a manner that meets specified criteria to maintain consumer protections.

In provisions regarding unfair and deceptive trade practices in insurance, the bill identifies, as an additional practice that shall not be construed as falling within the definition of discrimination or rebates, the practice of offering or providing a value-added product or service, not specified in the insurance policy, at no cost or at a reduced cost, if the product or service:

• Relates to the insurance coverage; and
• Is primarily aimed to:
• Provide loss mitigation or loss control;
• Reduce claim costs or claim settlement costs;
• Provide education about liability risk or risk of loss to individuals or property;
• Monitor or assess risk, identify sources of risk, or develop strategies for eliminating or reducing risk;
• Enhance health;
• Promote financial wellness through items such as educational or financial planning services;
• Provide post-loss services;
• Encourage behavioral changes to improve the health or reduce the risk of death or disability of a customer; or
• Assist in the administration of employee or retiree benefit insurance coverage.

The bill implements additional provisions governing the usage of insurance rebates, including requirements to offer such rebates at a reasonable cost and in a manner that is not unfairly discriminatory and that provides certain other customer protections.

(Note: Italicized words indicate new material added to the original summary; dashes through words indicate deletions from the original summary.)

(Note: This summary applies to the reengrossed version of this bill as introduced in the second house.)