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 licensed to function in Massachusetts” that Massachusetts legislation[1] prohibits, as an unfair or misleading act or observe 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 beneficial 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 aren’t solely restricted to “reductions on insurance coverage premiums”, however quite such rebates or inducements “embody funds, reductions or reductions, not specified within the insurance coverage contract, that will bestow something of worth, beneficial consideration, particular favor or benefit on the insurance coverage producer.”
The Bulletin additionally addresses actions that will “not directly present the insurance coverage purchaser with a ‘particular favor or benefit’ or ‘beneficial consideration or inducement’ not specified within the insurance coverage contract….” Particularly, the Bulletin makes clear that an insurance coverage producer, “or its widespread dad or mum, might not enable an affiliated non-insurance entity to pay ‘something of worth’ or ‘any beneficial consideration’, together with providing a reduced worth or fee 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 observe 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).
