Question of the Month

Q: Does the Maine Insurance Code allow producers to offer promotional incentives to customers?

A: No, except for those with nominal value. The anti-rebating laws generally prohibit any person from offering any inducement, discount, or incentive to purchase insurance that is not specifically included in the insurer’s filings. The exception is that a producer may offer gifts valued up to $20 per year per policy or quote in connection with the marketing of insurance, and conduct raffles or drawings with prizes valued at no more than $100, so long as there is no participation costs to entrants. These incentives may not be in the form of cash or cash equivalent.

Example 1: John has opened his new insurance agency, and wants to offer a free MP3 player valued at $24.99 to the first 50 prospective customers to visit his office for an insurance quote. May he do so?

A: No. This is a gift in connection with the marketing of insurance and its value exceeds $20.00. Therefore, this offer is prohibited under the rebating laws.

Example 2: Sue, who is an established producer, wants to reward her loyal customers by providing a yearly $15.00 gift certificate to a local restaurant to each existing policyholder. Do the rebate laws apply to this?

A: Yes. The rebate laws refer to gifts in connection with the marketing of insurance, which is further defined both in terms of the sale of policies, and the retention of existing insurance. Sue’s gifts are for the purpose of rewarding continuing business, and therefore relate to the retention of insurance. These gifts, therefore, are rebates. She is, however, allowed to offer them under the rebating laws, because their value is below $20.00 per year per policy.

Example 3: In order to promote his insurance business, William wishes to hold a drawing at a local Chamber of Commerce event. There is no charge to enter, but the winner will receive a personalized jacket worth $75.00, courtesy of “William’s Insurance Agency.” Is this allowed under the rebate laws?

A: Yes. The maximum allowable value for prizes in connection with free drawings is $100.00.

Example 4: Sarah, using a targeted mailing list, sends $5.00 checks to prospects as part of a promotional mailing encouraging them to contact her office for a quote. Is this allowed?

A: No. Even when the gift is below $20.00, the rebate laws also specify that the gift may not be in the form of cash or cash equivalent such as a check.

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