On Could 24, 2024, the Massachusetts Division of Insurance coverage (the “Division”) issued Insurance coverage Bulletin 2024-06, “inducements, rebates and affiliated entities” (the “Bulletin”). The Bulletin is addressed to “all licensed insurance coverage corporations and insurance coverage producers.” The Division issued the Bulletin to “remind insurance coverage corporations, officers thereof, and insurance coverage producers approved to function in Massachusetts” that Massachusetts legislation[1] prohibits, as an unfair or misleading act or follow in reference to the transaction of insurance coverage enterprise, insurance coverage corporations, officers, and producers from “paying, giving, or permitting to pay or give, straight or not directly, ‘something of worth’ or ‘any invaluable consideration’, not specified within the insurance coverage contract, as an inducement to the acquisition of insurance coverage or a rebate of insurance coverage premium.” The Bulletin additional reminds insurance coverage producers that Massachusetts legislation[2] additionally prohibits any “particular favor or benefit” to accrue to an such producer that’s not specified within the coverage. Illegal rebates or inducements are usually not solely restricted to “reductions on insurance coverage premiums”, however relatively such rebates or inducements “embrace funds, reductions or reductions, not specified within the insurance coverage contract, that might bestow something of worth, invaluable consideration, particular favor or benefit on the insurance coverage producer.”
The Bulletin additionally addresses actions that might “not directly present the insurance coverage purchaser with a ‘particular favor or benefit’ or ‘invaluable consideration or inducement’ not specified within the insurance coverage contract….” Particularly, the Bulletin makes clear that an insurance coverage producer, “or its widespread guardian, might not enable an affiliated non-insurance entity to pay ‘something of worth’ or ‘any invaluable consideration’, together with providing a reduced worth or charge on items and companies, to a buyer of that affiliate the place the consideration is meant to induce that buyer to buy insurance coverage from the producer or the place it’s contingent upon the shopper buying insurance coverage from the producer” as doing so would journey Mass. Gen. Legal guidelines ch. 176D, § 3(8), thus constituting an unfair or misleading act or follow within the enterprise of insurance coverage.
Read the full text of the Bulletin.
[1] See Mass. Gen. Legal guidelines ch. 176D, § 3(8); see additionally Mass. Gen. Legal guidelines ch. 175, §§ 182-183.
[2] See Mass. Gen. Legal guidelines ch. 176D, § 3(8).
