United States: Louisiana Insurance Regulator Confirms Innovator-Friendly Approach to Anti-Rebating

The practice of rebating has long been prohibited in nearly every state across the country. Despite this long-standing and widespread prohibition, the full scope of services that are and are not permissible under each state's anti-rebating laws has remained unclear. As technological solutions, which are often very valuable to consumers, have the potential to implicate these rebating laws, companies in the insurance industry—particularly the insurtech industry—are growing increasingly concerned with the scope of rebating regulations.

Regulators are also becoming increasingly active in this space, underscoring the collective concern. By way of example, the Louisiana Department of Insurance recently issued a revised advisory letter describing exemplary practices that constitute "value added" services that violate the state's anti-rebating laws and "value added" services that do not.1

Most notably, Louisiana Insurance Commissioner, James J. Donelon, explicitly stated that the state's anti-rebating laws do not prohibit a person engaged in the business of insurance from giving things of value outside of a contractual arrangement when there is no insurance contract or relationship. Donelon explained, "The term 'value added' services necessarily implies that the services offered to a party do in fact add value to a prior, ongoing, future, or continual purchase or other agreement between a buyer and seller of goods or services. Where there is no purchase or agreement, there can be no addition of value, and therefore, no 'value added' services." Thus, services offered to the general public do not violate the anti-rebating laws.

Similar to advisory opinions and letters issued by several other state insurance departments in recent years, the advisory letter also explains the distinction between certain services that constitute rebating when offered for free or at less than market value. Essentially, services that are incidental to the policy of insurance and that are offered to all insureds do not constitute rebating. This includes services such as risk assessments, insurance consulting services, insurance-related regulatory and legislative updates, and other services. On the other hand, services that are not truly incidental to the contract of insurance, such as certain COBRA administration services, payroll processing and/or services, and development of employee handbooks and training materials, and other services, may constitute rebating. This approach falls in line with other states, such as New York, Illinois, New Hampshire, and Missouri, that have issued guidance clarifying their anti-rebating and inducement statutes, providing that certain "value-added" services may be provided to insureds or potential insureds if they are provided incidental to the insurance and in a fair and nondiscriminatory manner.

The revised advisory letter also explains that common and ordinary marketing practices, which are distinguishable from services that are clearly designed as ongoing and continuous services, are not regarded as "consideration" or "inducement" when there is no quid pro quo arrangement and therefore do not violate the anti-rebating laws. Such marketing practices include the giving of tangible goods (e.g., T-shirts, pens), the giving or purchase of consumables (e.g., food and beverages) and other comparable services.

This advisory letter is in stark contrast to the approach recently taken by the Washington State Office of the Insurance Commissioner, which, on November 23, 2016, found that Washington anti-rebating and inducement laws prohibit a licensee, specifically California-based insurance producer Zenefits, from offering valuable software functions or other valuable benefits for free, or at less than fair market value, to the public. While the Washington state legislature recently proposed a bill to amend its anti-rebating and inducement laws to permit more valuable services, the bill has yet to pass, and the order effectively prevents any insurer from offering such services to the general public for free or at less than fair market value.2

As a result of the Insurance Commissioner's order, as of January 1, 2017, Zenefits began charging all Washington state customers $5 per employee per month for its core HR product — a service that was previously free to the public and is free in other states. Zenefits says that the majority of Washington customers decided to pay this price, leading to its announcement of a paid tier structure for other HR product offerings. The paid tier is known as "HR One" and consists of multiple tiers of service bundles sold on top of the core HR product.3 

The positions taken by Louisiana and Washington illustrate two very different regulatory approaches. On the one hand, there are the more company-friendly states that are supporting innovation by allowing insurers to provide consumers with valuable solutions at low or no cost with relatively little regulatory interference. Indeed, Donelon stated that "an uncritical and broad interpretation [of the state rebating statute] could have the substantially likely effect of fostering a less competitive marketplace for insurance that deprives policyholders of choice and value for their dollars, which is incompatible with and antithetical to" the rebating laws. On the other hand, there are the states that are more inclined to regulate such free or low-cost services offered to the general public in an effort to support fair competition, level the playing field for insurers and avoid consumer harm.

These contrasting approaches are likely to continue to develop, and it remains to be seen whether the majority of states will adopt a more forward-thinking view that continues to support innovation and serves industry and consumer interests alike.


1 Louisiana Department of Insurance, Advisory Letter No. 2015-01 (June 3, 2015, revised Mar. 14, 2017), available at http://www.ldi.la.gov/docs/default-source/documents/legaldocs/advisoryletters/al2015-01-cur-valueaddedservicesth.

3 See Shawn Hanson and Crystal Roberts, Debating Anti-Rebate And Inducement Laws In Washington, Law360 (Feb. 17, 2017), https://www.law360.com/articles/893176/debating-anti-rebate-and-inducement-laws-in-washington.

3 See William Alden, Loss-Making Zenefits Plans A Paid Software Tier, BuzzFeed (Jan. 13, 2017), https://www.buzzfeed.com/williamalden/loss-making-zenefits-plans-a-paid-software-tier?utm_term=.mnx05AaWZ#.egzzMP36d.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement

Mondaq.com (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of www.mondaq.com

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about Mondaq.com’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to unsubscribe@mondaq.com with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to webmaster@mondaq.com.

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to EditorialAdvisor@mondaq.com.

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at enquiries@mondaq.com.

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at problems@mondaq.com and we will use commercially reasonable efforts to determine and correct the problem promptly.