Under what conditions is rebating allowed?

Rebating is a practice where an agent or insurance company offers a portion of the premium back to the insured. In Florida, this practice is regulated to maintain fairness and integrity in insurance transactions.

The correct option points out that the rebate schedule does not exceed 5% of the premium. This guideline aims to prevent excessive favors being granted to certain insureds, thereby ensuring that all customers are treated equitably. Allowing a rebate of up to 5% keeps incentives modest and manageable, helping to maintain competitive balance within the insurance market while avoiding situations that could lead to unjust discrimination among clients.

The other choices, while related to the concept of rebating, do not align with the specific regulations governing such practices. The requirement that the rebate is available to all insureds in the same actuarial class focuses on fairness but does not directly address allowable limits. Filing the rebate schedule with the insurer and retaining it for five years could be operational procedures but do not define the core parameters under which rebating is permitted. The essence of permissible rebating hinges on controlling the extent of the rebate percentage to maintain market stability.