Insurance Anti-Rebate Statutes and Dade County Consumer Advocates v. Department of Insurance: Can a 19th Century Idea Protect Modern Consumers?
In 1984, a Florida court of appeals held that the Florida statutes prohibiting insurance agents from rebating part of their commissions to customers violated the due process clause of the Florida Constitution. The court concluded that no rational relationship exists between the anti-rebate statutes and the legitimate state purpose of protecting the public. The Florida decision is noteworthy because every state prohibits insurance agents and brokers from rebating to their customers a part of the commission earned from the sale of an insurance policy. In addition, every state prohibits unfair discrimination in pricing insurance policies and prohibits agreements between agents and insureds that are not clearly expressed in the insurance policy. Collectively, these prohibitions are designed to prevent insurer insolvency and unfair competition. The Florida case highlights a growing controversy over whether these statutes should prevent individual insurance purchasers from negotiating with the agent the price for the services rendered by the agent-the agent's commission. The controversy involves challenges both to the current marketing system of the insurance industry and to fundamental assumptions about consumer protections enacted nearly a century ago. This Comment reviews the history and application of anti-rebate laws, analyzes the arguments presented in the Florida decision, and suggests a transitional approach to ending a system of fixed commissions for insurance agents and brokers.
John S. Conniff, Insurance Anti-Rebate Statutes and Dade County Consumer Advocates v. Department of Insurance: Can a 19th Century Idea Protect Modern Consumers?, 9 SEATTLE U. L. REV. 499 (1986).