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Is a donation of commission to a charity considered an inducement to purchase a policy?

It depends on the business model.  The law allows an insurance producer to pay or assign commissions to a third party unless the payment violates Section 2024.  The following may assist you when developing a business model:

A producer may donate money to a charitable organization as long as:

  1. The donation is offered uniformly to all applicants for insurance and not only for specific transactions.
  2. The individual insured does not have any control over which charitable organization receives the donation.
  3. The charitable organization does not provide any consideration in exchange for the donation.
  4. The charitable organization does not engage in any activity that would constitute selling, soliciting, or negotiating insurance in violation of the Code.
  5. The charitable organization is not an affiliate of the insured such that a donation to it would result in a direct or indirect benefit to the insured.
  6. The charitable organization is not a client of the producer.

We strongly recommend that you consult with your attorney when considering a charitable or community donation program to determine compliance with the law.  Any program should be reviewed in accordance with sections 1240, 2024, 2066, 2070, 2024a, 2024b and 1207(3) of the Insurance Code.