Notice Regarding Rebating
Agents who offer rebates run a very high risk of criminal prosecution. As is Dunhill Marketing & Insurance Services' policy, we would like to remind our Producers of the following:
"Dunhill Producers shall not share commissions or any other compensation (including anything of value to induce the sale of a Dunhill carrier product) with an unlicensed person or entity. Dunhill does not permit rebating."
A recent announcement from the U.S. Attorney's office in New Orleans serves as a sobering reminder that not only is rebating a cause for immediate termination with insurance carriers, but that it also may lead to federal and state prosecution.
The U.S. Attorney charged a life insurance agent representing New York Life Insurance Company and Lincoln Financial with mail fraud, money laundering and asset forfeiture. The agent devised a scheme to defraud the insurance companies in order to receive commission payments by selling life insurance policies based on false statements and representations. He collaborated with six insurance applicants to apply for life insurance policies and paid the initial payments on behalf of the applicants. This process, known as "rebating," was prohibited by both companies’ policies as well as state law.
The agent faces a maximum sentence of 30 years in a federal prison plus fines of up to $500,000 or twice the gross gain from the offense, whichever is larger. The six insurance applicants were charged with conspiracy to commit mail fraud. These individuals face a maximum sentence of five years in federal prison and a fine of up to $250,000.
"This investigation should be a clear reminder that federal law enforcement's reach into white-collar crime extends beyond traditional health care, investment, and corporate fraud to bring those responsible to justice," stated FBI Special Agent in Charge Michael J. Anderson.
"People who conspire to create elaborate insurance fraud schemes run a very high risk of prosecution," stated James C. Lee, Special Agent in Charge, IRS-Criminal Investigation.
Dunhill would like to remind our Producers that engaging in "rebating" is strictly prohibited. Any Dunhill Producer found to be engaging in rebating will be terminated for cause with the carrier and state and will be ineligible to be contracted again. Dunhill may choose to pursue additional actions including but not limited to, the following:
• Reviewing the Producer's book of business and charging back all commission on any policy in which rebating occurred.
• Reporting the matter to all appropriate state and federal authorities.
Rebating is defined as directly or indirectly offering or giving as an inducement to purchase insurance "anything of value whatsoever" that is not plainly specified in the life insurance policy.
Rebating includes, among other things:
• any agreement to pay any part of a policy's premium
• any payment or gift offered as an inducement to purchase insurance
• offering any special advantage regarding the dividend, interest or other policy benefits, other than those provided by the terms of the policy
• offering to buy, sell, or give any type of security (stock, bond, etc.) or property, any dividends or income from securities or property, for the benefit of a policy owner
Rebating does not include small favors or gifts fairly characterized as tokens of appreciation. It is a common and permissible practice to thank policy owners or prospective purchasers with a meal and/or a nominal gift, such as a policy wallet. These courtesies are small in relation to the customer's obligation to pay premiums, and thus are not considered an improper means of reducing the price of the policy to the gesture of appreciation; he or she should exercise the greatest caution and good judgment.
Should you have any questions regarding Dunhill's position on this matter, please contact our Marketing Department at
(800) 659-1349.
Thank you,
Dunhill Marketing & Insurance Services, Inc.