Rebating: Why is Rebating Still Illegal in Many States?

[bill3173]

Thank G-d rebating is illegal. Of all of the mischievous schemes that agents come up with to sell policies, rebating is one they can get busted on, and I am totally in agreement with the laws against it.

 

[xrac]

If rebating were legal and everyone rebated. How will I make more money? There is always someone willing to sell a product or a service cheaper than the next fellow. What usually happens is it drives down the price in the industry and everyone starves.

 

[VolAgent]

If rebating were legal and everyone rebated. How will I make more money. There is always someone willing to sell a product at a lower service than the next fellow. What usually happens is it drives down the price in the industry and everyone starves.

Not only that, what happens next year when I don't rebate to keep your premium low? Now you can't afford it and either go without or replace it.

Nothing good comes of rebating back commissions.

 

[LGilmore]

"Caught? No point giving across the board rebates in a state where it's illegal. Other agents would report you in a nanosecond."

And they would know how? Rebates happen all the time everywhere. It's just a matter if you get caught by the carrier, the OIC and the IRS, which has happened to many agents before you and I. Another agent? Who listens to another agent?
Try contacting your OIC and complain about another agent, see how far it goes....

"Why this idea is so laughable? Consider it a thought experiment. If you're rebating certain products, you either have to make it up in volume or in up/crossing selling of other products (which might not even be an insurance product). "

Have you been in this business long? How do you sell a volume of insurance? Do you resell life every year? There isn't a volume of insurance to be sold. There's insurance of a few different types and if you rebate one, why shouldn't I expect you to rebate all?

If you're here suggesting cross selling other product besides insurance, which should capitvate all your time, you may have issues with carriers who do not like their products used as a door opener for another company... I just get this vibe you just started out, am I correct?

"It's a pretty common business practice in other industries. Use one product as a loss leader to drive greater revenue and lifetime value opportunities over the long term. "

Insurance is not another industry. It is not water heaters or hvac units, it's an intangible product that you can't bump extra inventory in somebody's back storage shed.

Good luck to you and your 75% giveaway, if you are able to live and operate your practice on 25% of your normal commission, well I am impressed. You'd be a first ever in the business.

Good luck man.


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[BNTRS]

I'll go one further and ask, do you really want to be in a position where you have to negotiate over how much you are going to give the person to buy from you?

 

[xrac]

"Caught? No point giving across the board rebates in a state where it's illegal. Other agents would report you in a nanosecond."​

And they would know how? Rebates happen all the time everywhere. It's just a matter if you get caught by the carrier, the OIC and the IRS, which has happened to many agents before you and I. Another agent? Who listens to another agent?
Try contacting your OIC and complain about another agent, see how far it goes.... ​

"Why this idea is so laughable? Consider it a thought experiment. If you're rebating certain products, you either have to make it up in volume or in up/crossing selling of other products (which might not even be an insurance product). " ​

Have you been in this business long? How do you sell a volume of insurance? Do you resell life every year? There isn't a volume of insurance to be sold. There's insurance of a few different types and if you rebate one, why shouldn't I expect you to rebate all? ​

If you're here suggesting cross selling other product besides insurance, which should capitvate all your time, you may have issues with carriers who do not like their products used as a door opener for another company... I just get this vibe you just started out, am I correct? ​

"It's a pretty common business practice in other industries. Use one product as a loss leader to drive greater revenue and lifetime value opportunities over the long term. "​

Insurance is not another industry. It is not water heaters or hvac units, it's an intangible product that you can't bump extra inventory in somebody's back storage shed. ​

Good luck to you and your 75% giveaway, if you are able to live and operate your practice on 25% of your normal commission, well I am impressed. You'd be a first ever in the business. ​

Good luck man. ​

I do not think this guy is even an agent. From what I can tell he may be a consumer shopping insurance.

 

[FL P&C Broker]

And how would you even handle chargeback? Tha would be a mess. Are you going to send your customer a bill for the commission you lost if they cancel the policy.

 

[xrac]

And how would you even handle chargeback? Tha would be a mess. Are you going to send your customer a bill for the commission you lost if they cancel the policy.

Wow! Wouldn't that be a bummer. That is a very good point. The consumer could screw the agent and the agent would have a very difficult time getting recourse. The only solution would to pay the rebate as earned.

 

[LGilmore]

"The consumer could screw the agent and the agent would have a very difficult time getting recourse."

No, the agent just reports it to the IRS. It's income that usually doesn't get reported. Sort of the weapon of last resort, turn em into the tax man.

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[VolAgent]

"The consumer could screw the agent and the agent would have a very difficult time getting recourse."

No, the agent just reports it to the IRS. It's income that usually doesn't get reported. Sort of the weapon of last resort, turn em into the tax man.

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And for the real laugh. Since rebates are illegal, you can't deduct it. But it is still taxable income to the recipient.