What is the illegal act of offering part of the insurance premium back to the insured called?

The illegal act of offering part of the insurance premium back to the insured is referred to as rebating. Rebating is a practice where an insurance agent or company returns a portion of the premium to the insured as an incentive to purchase a policy. This practice is prohibited in many states, including Arizona, as it undermines the fairness and competitiveness of the insurance market. It can create an uneven playing field, encouraging agents to base decisions on financial incentives rather than the best interests of the clients.

In contrast, other terms such as kickbacks generally refer to illicit payments made to agents by third parties, which is also illegal but distinct from rebating. Underwriting relates to the evaluation of risk associated with an insurance policy and does not involve financial incentives to the insured. Discounting, while it may seem related as it involves offering lower prices, is a legitimate marketing strategy and not directly tied to the return of funds from the premium. This reinforces the notion that rebating specifically pertains to returning a portion of the premium to the insured and is illegal in the context of insurance practices.