State RegulationsOH specificDifficulty 2/5
An Ohio-licensed producer wants to thank an unlicensed friend for sending him prospective clients. Which arrangement complies with Ohio law?
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Answer & full 3-part explanation (select an option above, or peek)
Why C is correct
ORC 3905.181 permits a referral fee to an unlicensed person only as a fixed dollar amount per referral that does not depend on whether a sale occurs. The moment the payment varies with sales — a commission, a percentage of premium, or a share of renewals — it becomes compensation for the transaction of insurance by an unlicensed person, which ORC 3905.18 prohibits an insurer or agent from paying.
Why the other options are wrong
- A) A payment contingent on the referral resulting in a sale is commission-like compensation for the transaction of insurance, which an unlicensed person may not receive.
- B) A percentage of premium varies with the sale and functions as commission compensation, outside the fixed-dollar referral allowance.
- D) Sharing renewal commissions ties the unlicensed person's pay to the ongoing policy transaction, which is prohibited compensation for unlicensed insurance activity.
Memory hook
Referral pay must be flat and fixed — never tied to a sale.