Insurance brokerage firms can legally give “rebates” to clients as long as they follow the law and regulatory requirements. The most important thing is to ensure the process is transparent, documented, and not done secretly. Here are three main approaches:

1. Using the Client’s Close Friends or Family as “Referrers”

• Method: If clients want to be introduced through friends/family, the brokerage can legally pay a “referral fee” to these relatives or friends. But note:
  1. The friend/family member cannot provide professional insurance advice or actual sales promotion (i.e., “regulated activities”);
  2. They must merely provide client contact information and introduce the brokerage to the client;
  3. The amount cannot be excessive, and you must avoid the appearance of “disguised” insurance selling.
• Key Reminders:
  • The brokerage only pays the “introduction fee” after a successful referral.
  • The friend/relative absolutely cannot issue policies on behalf of the broker, explain products, or handle sales – they can only make introductions and pass on contact information.
  • If the friend/relative actually participates in any insurance sales process, they must be licensed, otherwise they commit the criminal offense of “unlicensed operation”.

2. Formally Documenting “Rebate” Terms in the Contract

• Method: If the brokerage wants to directly rebate part of the commission to clients, the rebate details and amount must be clearly stated in:
  • The policy or Policy Schedule;
  • The Quotation;
  • Official “Promotional material” that is explicitly written into the contract.
• Key Reminders:
  • You must follow regulatory requirements like GL25 “Guideline on Offering of Gifts” which states that rebates are only legal if recorded in the policy or official documents;
  • Figures must be clearly written to avoid future disputes;
  • Transparency must be high – you cannot rely solely on verbal agreements or “under the table” money;
  • Compared to “secret cash exchanges,” this approach protects both you and your clients while complying with regulations.

3. Other Legal “Incentive” Practices

• Fee Reductions: For example, helping clients reduce part of their premium or administrative fees. If implementing this, it must be specified in the policy: “XX Premium Discount” – so the client’s payment amount is actually reduced.
• Value-Added Health Services: Offering “free health checks,” “medical consultation services,” or “fitness course discounts,” provided these services are related to the policy content and are documented as part of the policy or as official incentive details.
• Vouchers/Cash Coupons: “Premium reduction vouchers” issued by the insurance company that clients can use to “offset renewal premiums” are considered formal terms, equivalent to premium discounts, and must be clearly written into the contract.
• Extended Protection: For example, brokers can help clients negotiate “extended guarantee periods” or additional small accident coverage with the insurance company, but these must be recorded in the formal terms.

Final Reminders

• Always remember that all rebates or incentives must be linked to policy documents and cannot rely on verbal agreements alone.
• Prohibit unlicensed agents from helping to promote or sign documents on behalf of clients, which would constitute the serious violation of “unlicensed sales.”
• Brokerage firms must have sufficient staff and professional expertise to serve clients and cannot rely on friends “selling insurance for money” while only handling the signatures themselves.
• If you encounter grey areas, always consult compliance or professional legal advice first.

In summary, legal rebates should follow the “document transparency, clear terms” approach, which protects both the brokerage firm and clients. By following insurance regulations, IA guidelines, and industry codes of conduct, everyone can enjoy incentives without crossing boundaries.