By Molly Mulebriar
Would an insurance agent who promises to give up commissions on certain voluntary products along with an offer to provide “free” administration services in regards to a Cafeteria Plan (in return for commissions to be earned selling cancer policies and “other voluntary benefits”) be in violation of the Texas Insurance Code – rebating?
A Texas school district seeking competitive proposals for cafeteria plan administration and voluntary products recently held a public board meeting to consider awarding contracts for cafeteria plan administration and voluntary products.
One vendor, seeking the contract, made a presentation that went something like this: ” I know it sounds too good to be true…………..we have over 400 Texas school districts as clients …………….we are officially endorsed by a statewide school association……….we will save you a ton of money on commissions…………we have more market clout because of our size………all you have to do to join is to sign an interlocal agreement……….our cafeteria plan administration is “free”………”
Is this offer a form of rebating?
“The Insurance Code §541.056 applies to life insurance, accident and health insurance, and annuities, and prohibits, among other things, an insurer, insurance agent or other regulated entity from offering an insured or prospective insured an inducement or valuable consideration not specified in the insurance policy. It also specifically references §541.058, which enumerates certain practices legislatively declared not to constitute a rebate or inducement, and was amended by the 80th Legislature.”