Referral/Marketing fee legality

zackarychapple · 05-23-2007, 08:06 PM

I was curious if anyone knew how much we can give to another company or someone who send us referrals. If it is a marketing fee or a referral fee, what is the limit of the law and where can I find this information?

Dave020 · 05-23-2007, 09:28 PM

It may vary by state, but usually the limit is about $25.

David C · 05-23-2007, 09:56 PM

Just my opinion...

I cannot imagine a situation where I'd want to pay someone money for a referral. IMO it's not very professional. That being said I have given a bottle of nice wine to someone who has been a steady source of referrals through the years.

I've also seen another agent across the room in a restaurant and paid his bill because he CONSISTENTLY refers his health business to me.

To me it would cheapen the value of my services to pay money for referrals.

Frank Stastny · 05-23-2007, 10:18 PM

I agree with David.

If you give money there is a chance that they aren't going to think it is enough and or expect it every time.

I have given them a gift certificate to their favorite place to eat lunch. To sweet little old ladies, I may send a small bouquet of flowers.

I sell in the senior market in rural areas. There aren't a really lot of high priced places to eat in little towns. Even if there were my clients who are on a "fixed income" aren't going to eat there anyway.

I have even taken a picture of their place, flower bed, etc, printed it out and framed it for them. Especially if they are very proud of their flowers or the way their place looks.

It's the little things in life that count, those things that are "special", not how much money you give them. At least in the senior market.

David C · 05-24-2007, 12:17 AM

Frank, Great ideas about the photos/flowers. They'll remember that 20 years.

salpro22 · 05-24-2007, 08:49 AM

Originally Posted by zackarychapple

I was curious if anyone knew how much we can give to another company or someone who send us referrals. If it is a marketing fee or a referral fee, what is the limit of the law and where can I find this information?

Check with your local DOI regarding what they allow. I am allowed to provide a gift for a whopping $10 here in MD. I prefer to offer leads and/or gift certificates instead of money.

TheSalesWolf · 05-24-2007, 09:53 AM

I give out $25 gift cards to Target or Walmart to my clients all the time.
I let them know to send me everyone they know that may or may not need insurance. IF they sign up for insurance that client gets a $25 gift card.

It works and is a great incentive for them.

Mr. Bill · 05-24-2007, 11:46 AM

I met a World Financial Group rep yesterday who pays $50 for referrals.

What do you think about that?

salpro22 · 05-24-2007, 11:52 AM

I think gas cards are "in" during the summer.

Newby · 05-24-2007, 12:28 PM

I use $25 restaurant gift certificates or gas cards. I give them out whether or not a sale is made. But I ask the referrer to actually call the person they are referring for me and introduce me and hand the phone over to me.

James · 05-24-2007, 12:45 PM

I don't believe there is any law regulating Referral Fees or Network Payments.

Frank Stastny · 05-24-2007, 01:39 PM

Originally Posted by James

I don't believe there is any law regulating Referral Fees or Network Payments.

I also wondered about that when I read it. I know you can't "pay" to get someone to buy insurance, but I don't know of anything that would prevent one from paying for referring someone to you. Lead companies charge for the same thing all the time.

It is still a "referral". They are giving you a name for you to call of someone who is suppose to be interested in insurance. I don't believe it matters if it a company, a friend or a client. The money is not an enticement to buy insurance.

salpro22 · 05-24-2007, 02:01 PM

As long as the referral incentive is not based on the prospect buying I think things are fine. I could not get a direct response from the DOI and I was told to contact an attorney for specifics. Funny thing considering the fact that I "thought" that was part of their job to explain the regulations.

WBunch · 05-24-2007, 04:36 PM

Originally Posted by TheSalesWolf

I give out $25 gift cards to Target or Walmart to my clients all the time.
I let them know to send me everyone they know that may or may not need insurance. IF they sign up for insurance that client gets a $25 gift card.

It works and is a great incentive for them.

This is similar to what I do. I do gift cards sometimes and sometimes I use 2d/3nt hotel packages that I get in buld from a travel agency. If I do remember though it is legal as long as you are not giving them something as a reward to sign up, that would be called "REBATING". To my knowledge Florida is the only state that you rebate the client.