Expect Focus Life, Annuity, and Retirement Solutions, December 2019

Round and Round – Will 2020 Bring the End to Inconsistent Anti-Rebating Prohibitions?

Life, Annuity, and Retirement Solutions   |   Financial Services Regulatory   |   Securities & Investment Companies   |   February 6, 2020

Since mid-2018, the NAIC’s Innovation and Technology (EX) Task Force (Innovation TF) has been considering how state anti-rebating laws impede insurers and producers’ ability to offer innovative products and services to insureds. Innovation TF members sought to develop guidance or bulletins that would permit insurers and producers to provide “value-added” products and services. During 2019, the Innovation TF worked on language for a template bulletin as a potential alternative to revising the NAIC’s model Unfair Trade Practices Act (Model #880).

The Innovation TF initially worked on draft guidance that would allow for value-added products and services to be offered to consumers. However, as the Innovation TF went round and round in the drafting process, it discovered that the interpretation and implementation of Model 880 was inconsistent among the several states. Adding to the complexity, while the Innovation TF worked on the draft bulletin, Alabama, Arizona, Connecticut, Florida, Massachusetts, Missouri, New Hampshire, New York, North Dakota, Ohio, Pennsylvania, South Carolina, Washington, and West Virginia have either proposed or adopted new legislation, rules, or bulletins addressing their states’ anti-rebating prohibition.

While most of the new or proposed provisions would permit products or services that “mitigate,” “minimize,” or “assess” the insured “risk” or “loss,” some states provided for additional products or services such as “education” or “servicing.” In addition, some states imposed additional requirements. For example, Alabama also requires that the insurer be able to discontinue the service at any time. West Virginia requires the product or services to be “clearly identified and included in the policy.”

As a result of the variations, the Innovation TF agreed at the NAIC’s Fall National Meeting to abandon work on a template bulletin. Rather, to obtain more consistency across the states, the Innovation TF decided to draft Model 880 language to allow for providing value-added products and services. In 2020, a small drafting group will review draft language submitted by the American Property Casualty Insurance Association and comments and presentations received during 2019 and work on language for Model 880.

To increase the likelihood of uniformity among the states, the drafting group would also need to consider the Rebate Reform Model Act developed by the Financial Services and Multi-Lines Issues Committee of the National Council of Insurance Legislators. Hopefully, the Innovation TF will be able to develop revisions to Model 880 during 2020 that will be quickly adopted by the states to end inconsistent anti-rebating prohibitions.


©2023 Carlton Fields, P.A. Carlton Fields practices law in California through Carlton Fields, LLP. Carlton Fields publications should not be construed as legal advice on any specific facts or circumstances. The contents are intended for general information and educational purposes only, and should not be relied on as if it were advice about a particular fact situation. The distribution of this publication is not intended to create, and receipt of it does not constitute, an attorney-client relationship with Carlton Fields. This publication may not be quoted or referred to in any other publication or proceeding without the prior written consent of the firm, to be given or withheld at our discretion. To request reprint permission for any of our publications, please use our Contact Us form via the link below. The views set forth herein are the personal views of the author and do not necessarily reflect those of the firm. This site may contain hypertext links to information created and maintained by other entities. Carlton Fields does not control or guarantee the accuracy or completeness of this outside information, nor is the inclusion of a link to be intended as an endorsement of those outside sites.

Subscribe to Publications


The information on this website is presented as a service for our clients and Internet users and is not intended to be legal advice, nor should you consider it as such. Although we welcome your inquiries, please keep in mind that merely contacting us will not establish an attorney-client relationship between us. Consequently, you should not convey any confidential information to us until a formal attorney-client relationship has been established. Please remember that electronic correspondence on the internet is not secure and that you should not include sensitive or confidential information in messages. With that in mind, we look forward to hearing from you.