HBC-SLBA Healthcare Management and Benefit Consultants Specializing in Higher Education

Frequently Asked Questions

Our insurance agent has offered to make donations to the athletic department (and occasional donations to other university entities). Are these donations permissible under the insurance standards? (submitted by an unknown party)

The short answer to this inquiry is that the ACHA Standards would prohibit this practice under the following sections:

The inquiry received by FAX is from the State of New York, so we presume the State of New York's insurance regulatory law would apply. The State of New York strictly prohibits the practice of rebating relative to insurance products.

N.Y. Ins. Law Section 4224(c)(McKinney 1985) provides:

No such life insurance company and no such savings and insurance bank and no officer, agent, solicitor or representative thereof and no such insurer doing in this state the business of accident and health insurance and no officer, agent, solicitor or representative thereof, and no licensed insurance broker and no employee or other representative of any such insurer, agent, or broker, shall pay, allow or give, or offer to pay, allow or give, directly or indirectly, as an inducement to any person to insure, or shall give, sell or purchase, or offer to give, sell or purchase, as such inducement, or interdependent with any policy of life insurance or annuity contract or policy of accident and health insurance, any stocks, bonds, or other securities, or any dividends or profits accruing or to accrue thereon, or any valuable consideration or inducement whatever not specified in such policy or contract; nor shall any person in this state knowingly receive as such inducement, any rebate of premium or policy fee or any special favor or advantage in the dividends or other benefits to accrue on any such policy or contract, or knowingly receive any paid employment or contract for services of any kind, or any valuable consideration or inducement whatever which is not specified in such policy or contract. (emphasis added). Id.

HBC-SLBA is not aware of any jurisdiction that does not expressly prohibit the practice of rebating. Donations are clearly a form of rebating if there is any expectation that the contributions will affect the insurance purchasing process, either directly or indirectly.

Rebating statutes and regulations have been broadly interpreted in most jurisdictions. College and university administrators should take special caution in accepting any financial consideration from an insurance company, agent, or other party. College or university development offices and other entities that routinely solicit funds from vendors should be made aware of the prohibition against rebating relative to the operation of student health insurance programs.

Nothing in this FAQ response from HBC-SLBA should be construed to be legal advice or legal opinion. Legal questions should be reviewed by the legal counsel for the college or university submitting the inquiry.

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