State RegulationsGA specificDifficulty 2/5
A producer in Savannah offers to give a prospective client a portion of her commission if he purchases a life policy through her. Under Georgia's unfair trade practices law, this arrangement is:
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Under O.C.G.A. § 33-6-4(b)(8)(B), it is an unfair trade practice for a producer to give or offer, directly or indirectly, rebates of premiums, special favors in dividends or benefits, or any valuable consideration not specified in the contract. The statute also makes it unlawful for the customer to receive or accept such a rebate, so both parties are exposed to discipline by the Insurance Commissioner.
Why the other options are wrong
- A) A written agreement does not legalize rebating; the prohibition applies to any rebate not specified in the contract itself.
- B) Commissions are paid under the insurer's agency contract; a producer may not divert part of them to the applicant as an inducement.
- D) The statute prohibits both giving and accepting rebates, so the client who accepts the rebate is also violating Georgia law.
Memory hook
No kicking back: Georgia bans rebates for both the giver and the taker.