What term is used for the act of unlawfully giving a discount on insurance premiums?

The term used for the act of unlawfully giving a discount on insurance premiums is rebating. This practice involves returning a portion of the insurance premium to the policyholder as an incentive to purchase the policy, which is prohibited in many jurisdictions, including Arkansas, as it can create unfair competitive advantages between insurers and disrupt the integrity of the insurance market. Rebating undermines the standard pricing structure that insurance companies rely on to assess risk uniformly and maintain fair competition.

In insurance regulation, rebating is often viewed as unethical because it can be misleading and may encourage consumers to make decisions based solely on the discount rather than on the quality and coverage of the policy being offered. Consequently, states have laws in place to prohibit rebating to ensure that all policyholders are treated fairly and equitably, maintaining a level playing field among insurers.

The other terms provided do not pertain to the unlawful discounting of premiums. Underwriting refers to the process in which insurers evaluate risks and determine appropriate premium rates. Misleading advertising involves providing false or deceptive information about an insurance product, while coercion pertains to the use of threats or pressure to persuade someone to act against their will, which does not specifically relate to discounting premiums.