What act is committed when a producer offers a portion of their commission to a client as an inducement to purchase a policy?

The act of offering a portion of a producer's commission to a client as an inducement to purchase a policy is referred to as rebating. Rebating occurs when an agent or producer offers financial incentives to encourage the purchase of an insurance policy, which can create unfair competition and lead to ethical concerns within the insurance industry.

In many jurisdictions, including Pennsylvania, rebating is prohibited because it can distort the true value of insurance products and mislead clients regarding their actual costs. The law aims to ensure that clients make informed decisions based on the product itself rather than financial incentives that could misrepresent the policy's true worth.

Inducement can imply persuading someone to act in a particular way, but in the context of insurance and legal definitions, the specific act of sharing commission is defined more precisely as rebating. Coercion refers to forcing someone to act in a certain way, which is not the case here. A promise lacks the specific financial context that rebating entails, focusing instead on general commitments without catering to incentives based on commission structure.