Which of the following is an example of rebating?

Rebating refers to the practice of returning a portion of the premium paid by the insured or providing an incentive that is not allowed under the rules to encourage the purchase of insurance. In this context, when a producer pays a portion of their commission back to the consumer or offers it as a benefit for the purchase of a policy, it constitutes rebating. This practice is often viewed as unethical and is prohibited by various insurance regulations because it can lead to unfair competition among insurance producers and distort the market for insurance products.

The other options reflect actions that do not fall under the definition of rebating. Offering a discount for prompt payment is a standard practice and incentivizes timely payments without providing an illegal advantage or inducement. Accepting a gift card from the insured does not pertain to the inducement to purchase a policy, and giving a policyholder free coverage for a month can be a promotional strategy as long as it’s part of the terms of the policy and does not involve returning part of the commission. Thus, paying a portion of the producer’s commission to sell a policy is the only option that correctly aligns with the definition of rebating.