What is the intent behind the practice of rebating in insurance?

The intent behind the practice of rebating in insurance is primarily to attract new customers with lower premiums. Rebating involves returning a portion of the premium to the insured or offering non-cash incentives as a way to entice them to purchase an insurance policy. This practice aims to create a competitive advantage for agents or insurers in a crowded market by making their offerings more appealing than those of competitors.

In many states, including Georgia, rebating is prohibited due to concerns that it can lead to adverse selection, undermine the integrity of pricing structures, and create unequal competition among agents. However, the underlying principle of rebating is geared towards customer acquisition by directly lowering the effective cost of insurance through financial incentives.