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 Posted: Mon Nov 24, 2008 6:44 am Post subject: Is this good practise to pass by the comissions to client ? |
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Is this good practise to pass by the comissions to client ?  
post edited as per the forums rule
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ensurepune
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| Posted: Mon Nov 24, 2008 9:35 am Post subject: |
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| Quote: | | Is this good practise to pass by the comissions to client ? |
No, its deemed illegal  though its not considered as criminal offence, but may cause a trouble to the agent if uncovered by the insurance company.
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anony-moss
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| Posted: Mon Nov 24, 2008 9:42 am Post subject: |
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Yeah, some insurance agents surely do this to attract business. Some even promise to pay the first installment of the premium on behalf of the client. As long as the payment is from the agent's commission its not hampering the interest of the insurance company, but its certainly affecting the credibility of the agent. However, since the market is become fierce many are adopting the method to survive in the industry.
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guest-diva
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| Posted: Mon Nov 24, 2008 10:53 am Post subject: |
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This if not illegal is certainly unethical....and sounds like a 'ploy' to write the policy what if that agent quits, gets fired etc....
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Lori
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| Posted: Mon Nov 24, 2008 11:37 am Post subject: |
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| Quote: | | and sounds like a 'ploy' to write the policy |
This certainly is unethical. In fact it's a form of bribing, where the insurance agent is offering “gift” to the client to purchase a policy from him. It can also lead to wrong selling since the customer is buying the policy to receive some undue benefits. This practice surely will affect the transparency of the entire industry.
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richmind
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| Posted: Mon Nov 24, 2008 12:41 pm Post subject: |
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Well believe it or not rebating IS allowed under Florida law.
See THIS LINK.
However, 626.572 (d) states: "Rebates shall not be given to an insured with respect to a policy purchased from an insurer that prohibits its agents from rebating commissions."
No company that I have ever contracted with allows rebating.
And I know of no company that allows rebating.
It is a totally unethical and bad business practice.
Nothing more than an inducement of money to purchase the policy rather than the need for the product.
There's more to this "Florida" story but I don't have time to type right now.
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GarySpicuzza
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| Posted: Mon Nov 24, 2008 1:44 pm Post subject: |
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I agree whether it is legal in some states or not, it's clearly (IMO) unethical...and again I'd worry (if I were the insured) what happens if this agent, (for whatever reason) is no longer my agent? 'whomever (the company) will continue with this ''agreement'' so then you''ve been paying minus the commission for ten years, the agent leaves then bam...you're paying all the premium then..after investing this long...sounds like bad buisness practices to me and should never be allowed anywhere.
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Lori
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| Posted: Tue Nov 25, 2008 12:44 am Post subject: |
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What you are suggesting is most definitely "rebating" and is illegal in most states. Even in those states where it's legal, there are normally limits and a boatload of paperwork that needs to be filled out to adhere with the state rules.
I agree with the others. It's a horrible business practice to employ, and is considered to be an "illegal inducement" in all but a few states. I would never hire an agent that uses rebating to attract and retain clients. The reason? Simple...
The agent should be selling the benefits of the policy and the protection offered by the carrier and the agent. If you start attracting clients due to your paying a rebate, what's going to happen when another agent offers a "higher" amount of rebate? Are you going to get into a bidding war for that client's business? Sets a dangerous precedent.
I would, if I were you, refer to GarySpicuzza's link, and read it carefully.
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InsTeacher
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| Posted: Tue Nov 25, 2008 12:55 am Post subject: |
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Interesting discussion. What if your prospect asks for a rebate and if you don't give discount, the prospect will get insurance from someone else, how do yuo handle this situation?
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Xoseph
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| Posted: Tue Nov 25, 2008 5:19 am Post subject: |
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I only know of two states that allow it, and I know of NO insurer that condones the practice. California and Florida, and I have no idea if the law has changed in other states, too.
How would I handle a client that said "If I don't get a rebate, I'm going to another agent" to me? I have, and will always advocate, that you tell that client to find another producer. Asides from being illegal in most states, unethical from many viewpoints, and somwhat sleazy from a moral point of view- what a good producer offers his client should go well beyond a simple rebate.
This is not a "sales tactic" in any stretch of the word. It's bribery from the producer's angle, and it's extortion when looking at the client's side. I have been a multi-award winning producer when working for a captive, owned a successful agency, and run thousands of salespeople as a company officer, and have never once offered a rebate nor ever knowingly allowed one to be paid to a client. I have terminated more than one agent for illegal actions and never felt remorse for a second.
It's simple- take care of your clients and your clients will take care of you.
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InsTeacher
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| Posted: Tue Nov 25, 2008 5:25 am Post subject: |
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Xoseph, I agree that it's a very competitive situation and we all need to survive feeding on a very small section of customers. Therefore, the customers can always ask for such free rides.
The agent needs go identify the requirement of the client and sell him/her the policy accordingly. The client who asks for rebate isn't in genuine need for the coverage and there is high chance that he might default with the premium in the long run. This too will affect the prospect and earning of the agent. |
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jeorge
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| Posted: Tue Nov 25, 2008 10:32 am Post subject: |
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| Quote: | | How would I handle a client that said "If I don't get a rebate, I'm going to another agent" to me? I have, and will always advocate, that you tell that client to find another producer. |
EXACTLY.
InsTeacher has hit the nail on the head, simply inform the client they'll have to find another agent.
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GarySpicuzza
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| Posted: Tue Nov 25, 2008 11:17 am Post subject: |
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| Quote: | | What if your prospect asks for a rebate and if you don't give discount, the prospect will get insurance from someone else, how do yuo handle this situation? |
You just say, (nicely) '' Kick rocks fella" seriously who would want to do business with someone like this? I'd personally say, 'I'm sorry I don't do business that way, and any agent that does is breaking the law, if they'll break this one, logic follows they will break others...hope you find one, and hope you get all ''you think'' you're getting for your money"....seeeeeeeeeeeeeeeeee ya'
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Lori
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| Posted: Wed Nov 26, 2008 7:31 pm Post subject: |
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That type of person will also "better deal" you in a second. That means dealing with chargebacks and all sorts of other headaches...
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beatuplunchbox
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| Posted: Wed Nov 26, 2008 9:17 pm Post subject: |
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| You guys are right this is called Rebating. But it is not necessarily illegal or unethical. It is determined by state law and normal requires you to no discriminate who you rebate to. For example if you are rebating just for your family members or friends it would be illegal. if you rebate 10% of your commissions on all Lincoln policies for everyone, than it would be ok (again it is dictated by state insurance code). As far as the whole "what if your agent leave the business" question. I can not think of an instance where an agent would give up renewal comp because it is sooooo small. Most of the commission is made in the first year. I think it is up to every agent to decide if they want to rebate or not. I have seen it used effectively in a situation where the agent rebated a percent of his comp to a charity when members of the charity purchased life insurance with him for the charity. It all depends on how you want to run your business and what state your writing the business in. Just my 2 cents. |
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Marpol
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