Rebating in insurance practice refers to offering what?

• A. Offering or giving any rebate of premium or anything else of value as an inducement to buy insurance.
• B. Charging higher premiums for the same risk.
• C. Providing loyalty rewards after policy issue.
• D. Selling a policy without authorization.

Answer: (A)

Rebating is offering or giving something of value to induce someone to buy insurance. This practice is illegal in many states because it creates an unfair incentive, encouraging buyers to choose a policy not based on merit or price alone but on the inducement received. The best choice captures this idea exactly: a premium rebate or any other valuable inducement used to persuade a purchase.

The other scenarios don’t fit rebating. Charging higher premiums for the same risk is simply unfair pricing, not an inducement to buy. Providing loyalty rewards after policy issue is a reward for continuing the relationship, not an inducement used to initiate the purchase. Selling a policy without authorization is fraud and a separate violation, not a rebate.