The "Model Rebate Reform Act" (Senate Bill 58) aims to modernize Colorado's insurance rebate laws while maintaining consumer protections. Key provisions include:
Permissible Gifts and Prizes: Insurers and insurance producers can offer:
Gifts up to $250 per person annually related to marketing, purchasing, or retaining insurance contracts.
Free raffles or drawings with prizes up to $500, provided there's no cost to enter.
Value-Added Products and Services: They may provide free or discounted products or services that:
Educate about, assess, monitor, control, mitigate, or protect against loss of life, health, or property.
Enhance the value of insurance benefits.
Additional Services: Services not directly related to an insurance contract can be offered for free or at a discount if:
They're at least tangentially related to insurance or its administration.
Receiving the service isn't contingent on purchasing insurance.
The service is available on the same terms to all potential customers.
Before providing such services, insurers or producers must disclose in writing that receiving the service doesn't depend on buying insurance. The Commissioner of Insurance is authorized to adopt rules to implement these provisions, including adjusting financial limits for inflation.
Supporters argue that these changes will foster a more dynamic insurance market, encouraging innovation and competition, while ensuring transparency and consumer protection.
However, some consumer advocacy groups express concern that loosening restrictions on rebates could lead to potential abuses, where consumers might feel pressured to purchase insurance products under the guise of receiving free services.
Summary
The bill creates the Model Rebate Reform Act to modernize the
law concerning insurance rebates by recognizing new insurance products while maintaining necessary consumer protections. The bill allows an insurer or insurance producer to give a gift valued under $250 in connection with the marketing, purchase, or retention of an insurance contract and to conduct a free raffle or drawing with prizes valued up to $500.
Additionally, the bill provides that an insurer or insurance
producer may give a free or discounted product or service in conjunction with or related to an insurance contract if the product or service:
•
Is intended to educate about, assess, monitor, control, mitigate, or protect an individual against loss of life, health, or property; or
•
Has a nexus to or enhances the value of the insurance benefits.
Next, the bill provides that an insurer or insurance producer may
provide an additional free or discounted service if the service is at least tangentially related to an insurance contract or the administration of an insurance contract, the receipt of the service is not contingent on the purchase of insurance, and the service is offered on the same terms to all potential insurance customers. Before the purchase of insurance, receipt of a quote for insurance, or designation of an agent of record, the insurer or insurance producer providing the service shall disclose in writing to the recipient that receipt of the service is not contingent on the purchase of insurance.
Lastly, the bill permits the commissioner of insurance to adopt
rules as necessary to effectuate the provisions of the bill, including adjusting the financial limitations on gifts and prizes as necessary for inflation.
