The State of Connecticut Department of Insurance (the “Department”) has recently stated that de minimis gifts not exceeding $15 in aggregate value per year are permissible under Connecticut’s anti-rebating statute, Conn. Gen. Stat. § 38a-825. According to the Department, the anti-rebating statute is broadly written and promotes the public policies of (1) preventing the creation of competitive disadvantages among insurers and producers by creating a level playing field for all insurance professionals; and (2) protecting insurance consumers and the public at large from unfairly discriminatory rates and practices by ensuring that an insurance policy’s written terms are applied consistently to all policyholders.
Although no monetary limit is provided in the statute, the Department’s Bulletin S-12 sets “a reasonable monetary limit on the value of gifts that insurers and insurance producers are allowed to give to their clients in connection with the solicitation or sale of insurance products.” By arriving at a de minimis amount, the Department has provided “practical guidance to the insurance industry and to the public by setting reasonable standards that allow a producer or insurer to offer gifts of nominal value.” According to the Department, it is impractical and unnecessary to prohibit gifts that, because of their low market value, would be insufficient to promote the kind of conduct and negative results that the anti-rebating statute intends to prevent.
Examples of gifts of nominal value include calendars, pens, promotional items, inexpensive items relating to life events (e.g., birthday cards), or inexpensive meals. Any gifts that exceed the $15 limit are seen by the Department as an unlawful inducement to insurance within the meaning of Conn. Gen. Stat. § 38a-825. Further, the Department’s Bulletin S-12 states that the terms “gift,” “valuable consideration,” “benefit,” “special favor,” “rebate,” “inducement” or other similar terms include, but are not limited to, cash, gift certificates, merchandise, services not directly related to insurance, meals, entertainment or reduced insurance premiums offered or given by an insurer or producer and relating to the insurer/insured or producer/client relationship.