State RegulationsOH specificDifficulty 1/5
Which of the following best describes the unfair trade practice of rebating under Ohio law?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
Rebating under ORC 3901.21(G), reinforced for life insurance by ORC 3911.20 and ORC 3933.01, means paying, allowing, giving, or offering as an inducement any rebate of premiums, a special favor or advantage in dividends or benefits, or any valuable consideration not specified in the contract. Ohio also prohibits knowingly receiving or accepting such rebates, so both sides of the deal are exposed.
Why the other options are wrong
- A) Risk-based rating that reflects the applicant's own actuarial class is proper underwriting, not discrimination or rebating, so long as persons of the same class are treated alike.
- B) Commission sharing between licensed producers is a normal business arrangement; the commission rules under ORC 3905.18 target payments to persons required to be licensed but not licensed.
- D) Paying policy dividends exactly as a participating contract provides is squarely permitted; the problem arises only with favors or advantages not specified in the contract.
Memory hook
Rebating = a sweetener the contract never promised.