In insurance terminology, what does "rebating" refer to?

Rebating refers specifically to the practice of sharing a portion of an agent's commission with a potential policyholder as an incentive to induce them to purchase an insurance policy. This is considered an illegal practice in many jurisdictions, including Washington, because it can create an unfair advantage and lead to unethical sales practices.

The focus here is on the idea that a rebate is provided not merely as a functional discount or policy benefit but as a direct inducement, which distinguishes it from other practices like offering lower premiums or incentives for renewals. These other actions might be legitimate under specific circumstances, as they focus instead on the pricing and value of the insurance rather than on the personal compensation structure of the agent. Thus, rebating is specifically tied to the commission-sharing aspect, highlighting the ethical issues that can arise in insurance sales.