IIABNY cheers law loosening restrictions on insurance agents’ gift-giving

Insurance agencies no longer have to stick to branded items like coffee mugs when they give gifts to their clients and prospects because of a new state law being applauded by the Independent Insurance Agents & Brokers of New York, Inc. (IIABNY).

The law, which became effective when New York Gov. Andrew Cuomo signed it Aug. 1, eliminates a requirement that insurance agencies give only articles of merchandise that bear the agencies’ names. In the past, that requirement kept insurance agents from giving gifts like restaurant gift certificates or discounts on defensive-driving courses.

In addition, the law ups to $25 the value of gifts that agents are allowed to give clients. The limit was previously $15.

“This is something that many business owners like to do, they like to give a little thank-you for doing business with them,” says Tim Dodge, director of research and media relations for the DeWitt–based IIABNY. He believes the vast majority of insurance agents want to find other ways of competing beyond the prices they charge and show customers that they are grateful.

IIABNY members regularly contacted Dodge to consult about the old restrictions, known as anti-rebating provisions, he says. Inquiries concerned a range of potential presents, from gifts like smoke detectors that are tied to loss prevention to gas cards, he continues.

Smoke detectors under $15 in value were permissible as long as they bore the agent’s or agency’s name, according to Dodge. But before the new state regulations went into effect, gas cards were not. Still, they were a common cause of inquiry whenever pump prices spiked, he says.

The new regulations are not a gutting of the former law, according to Dodge.

“The spirit of the law has never been to prevent people from giving out Panera Bread gift cards, but that was the way it was written and that was the way the regulators had to enforce it,” he says. “The purpose of the rebating law is to prevent insurance producers and insurance companies from illegally discriminating, saying, ‘I really like this customer, so I’m going to give them a car.’ ”

The $10 increase in the value limit for permissible gifts isn’t enough to allow insurance agents to really favor some customers over others, Dodge argues. He compared the new $25 limit to half of a tank of gasoline.

“We don’t think it’s an invitation to corruption or indecent behavior,” he says. “When people think of kickbacks, they think of larger sums than $25.”

The law is also beneficial to insurance agents simply because it cuts many of the strings attached to giving thank-you gifts, Dodge says. Agents will appreciate the new simplicity, while consumers aren’t likely to notice much of a difference, he says.

Dodge contends the newly loosened restrictions probably aren’t the end of calendars and coffee mugs emblazoned with insurance agencies’ names. Those gifts are a good way to improve an agency’s visibility, and agencies typically order them in large quantities, he says.

“I don’t think these things are going away, if for no other reason than that agencies have closets full of them that they ordered,” Dodge says.

IIABNY represents the business interests of more than 1,750 insurance agencies in New York State. Those agencies employ more than 13,000 people, according to the association, which is a not-for-profit organization focusing on legislative advocacy, continuing education, and industry support. It is headquartered at 5784 Widewaters Parkway in DeWitt.                

Contact Seltzer at rseltzer@cnybj.com