What is rebating in Texas insurance practice, and is it allowed?

• A. Providing a premium discount to all customers; it is allowed.
• B. Returning unused premiums to policyholders; it is allowed.
• C. Offering money or something of value to influence a policy purchase; it is prohibited.
• D. Offering free policy rider with no effect on purchase; it is allowed.

Answer: (C)

Rebating is offering money or something of value to an applicant or policyholder to influence the decision to buy insurance. In Texas, this inducement to purchase is prohibited to keep competition fair and to protect consumers from pressure or biased deals.

The description that matches this concept is: offering money or something of value to influence a policy purchase; it is prohibited. This captures the illegal practice of using incentives to steer a buyer’s decision.

Other options describe legitimate or different refund practices: returning unused premiums is a normal, allowed practice and not an inducement tied to procurement; giving a discount to all customers is a general pricing tactic and not a targeted inducement; and offering a free rider that doesn’t affect the purchase decision isn’t an inducement to purchase. The core idea is that any attempt to influence the purchase with a valuable inducement is not allowed.