TEST REVIEWS chapter 1

Judith is injured in a car accident. She incurs a covered loss of $50,000. She is required to pay $3,000 before the insurer will cover 80% of the covered loss. Which of the following terms best describes the $3,000 Judith must pay? Select one: a. Premium b. Deductible c. Coinsurance d. Claim

A deductible is the amount an insured must pay before the insurer will begin to pay benefits. The correct answer is: Deductible

The term describing the insured's notification to the insurer requesting payment for a covered loss is: Select one: a. Limit of liability b. Premium c. Claim d. Deductible

An insurance claim is the insured's notification to the insurer that a payment is requested for a covered loss. The correct answer is: Claim

Fraternal Benefit Societies "Fraternals provide insurance solely to their members." "Fraternals are exempt from taxes."

Fraternal benefit societies, also known as fraternal insurers or simply fraternals, are special types of mutual insurers/nonprofit religious, ethnic or charitable organizations that provide insurance exclusively to their members. People who are members of a fraternal benefit society tend to be the members of a fraternal organization or lodge. The lodge system has a representative form of government. *Fraternal benefit societies are exempt from federal income tax and state premium tax because they are categorized as charitable organizations.* Fraternal benefit societies are mostly involved in life and health insurance. An example of a fraternal benefit society is the Modern Woodmen of America.

Mutual insurers pay dividends to: Select one: a. They don't pay dividends. b. Shareholders c. Board of Directors d. Policy owners

Mutual insurers pay dividends to policy owners. The correct answer is: Policy owners

Stock insurers are also called: Select one: a. Participating b. Government insurers c. Nonparticipating d. Service providers

Stock insurers are also called Nonparticipating, because they pay dividends to shareholders not policy owners. The correct answer is: Nonparticipating

The Unfair Trade Practices Act

The Unfair Trade Practices Act is divided into two parts: *Unfair marketing practices* and *Unfair claims practices.* In each state, statutes define and prohibit certain trade and claims practices that are unfair, misleading, and deceptive. Violations of these laws are taken seriously and can result in loss of license.

*Domestic, Foreign and Alien Insurers;* Insurers are categorized as domestic, foreign or alien based on where their business is transacted with respect to the location of incorporation. An insurer's domicile of incorporation is the state or district in which it became an incorporated company.

*Domestic Insurer* An insurer that conducts business in the state it was incorporated is a domestic insurer. *Foreign Insurer* A foreign insurer is any insurer that conducts business in a state or district in which it wasn't incorporated. *Alien Insurer* An alien insurer is any insurer that conducts business in a country in which it wasn't incorporated.

Unfair Claims Settlement Practices and Penalties

-Claims settlement practices are regulated in the public interest. -Insurance companies have collected and held policyholders' money for the purpose of settling claims. -When insureds are denied claims or claim payments are delayed unreasonably or altered, the consequences go beyond the policy benefits and can drastically affect other areas of the insured's financial situation. -The unfair claims practices provisions are designed to protect insureds and claimants from any claims settlement practices that are unfair, deceptive, or misleading. Penalties; Following an investigation and a hearing, if the Department of Insurance finds that any person or insurer is engaged in any unfair marketing or unfair claims practice, the Commissioner may issue a cease and desist order prohibiting the individual or company from continuing the practice. Failure to comply with the cease and desist order can result in a substantial fine. In addition, fines and loss of license may also be imposed for a company or person guilty of violating the Unfair Trade Practices Act. Also the District Attorney if the violation is severe.

Private Insurers

-Private insurers offer insurance to people through the *individual market* -Private insurance is sold on a *voluntary basis* (MOSTLY) -Some forms of insurance is offered through private insurers are *compulsory.* -There are two groups of commercial insurers: *Stock insurers, and Mutual Insurers .* -There are various types of private insurers,including: Stock insurers (commercial), Mutual insurers (commercial), Noncommercial organizations, Fraternal benefit societies, Lloyd's Associations, Risk retention groups, Risk purchasing groups, Reciprocal exchanges, Reinsurers, Assessment insurers and Excess and surplus lines.

Service Providers or Noncommercial Organizations

-Service providers, or noncommercial organizations, are *not technically "insurers" and do not sell insurance.* -They are better described as service organizations that provide prepaid health plans for medical, surgical, and hospital expenses. -Service providers *sell medical services to members,* who are termed subscribers. -The insured is not reimbursed for the medical services received.Instead, *the service organization pays benefits directly to the health care providers the subscribers' use.* -Two common types of service providers are: *HMOs- Health Maintenance Organizations*, and *PPOs- Preferred Provider Organizations*. -*HMOs provide the medical care and finances* required to fund health care services. Subscribers obtain medical care through *hospitals and physicians that have contracted with the HMO.* -*PPOs provide discounted medical services to members.* -A group wishing to provide health care services to its members forms a PPO. The PPO receives a special discounted rate by using certain medical practitioners, hospitals and clinics. In exchange, the *PPO will refer members to these medical professionals.* An insurance company may contract with a PPO to provide medical services to insureds. -Unlike stock or mutual insurers, *noncommercial organizations are nonprofit entities offering strictly health insurance coverage.*

Mr. Norris, an insured, submits a claim and proof of loss for medical expenses covered by his major medical policy. According to the time-of-payment-of-claims provision, how soon must the company pay the claim? Select one: a. Within 90 days b. Within 30 days c. Immediately d. Within 150 days

According to the time-of-payment-of-claims provision in major medical policies, the company must pay the claim immediately. The correct answer is: Immediately

What must an insurer have to be admitted? Select one: a. Authorization from the federal government b. Certificate of authority c. Certificate of coverage d. None of the above

Admitted, or authorized, insurers must have a certificate of authority to transact insurance in a particular state. The correct answer is: Certificate of authority

Making a misleading statement to induce a person to lapse, surrender, or convert an insurance policy is known as: Select one: a. Coercion b. Twisting c. Conservation d. Replacement

It is illegal to knowingly make misleading statements or comparisons regarding the terms, conditions, benefits, or advantages of any policy to induce any person to lapse, forfeit, surrender, exchange, convert, or otherwise dispose of an insurance policy. This unfair trade practice is called twisting. The correct answer is: Twisting

Mutual insurers are also called: Select one: a. Government insurers b. Service providers c. Participating d. Nonparticipating

Mutual insurers are also called Participating, because they pay dividends to policy owners. The correct answer is: Participating

Which of the following is the consideration an insured pays for insurance coverage? Select one: a. Deductible b. Premium c. Limit of liability d. Coinsurance

Premiums are the cost of insurance coverage and the insured's consideration. The correct answer is: Premium

The consideration an insured pays for insurance coverage is known as a: Select one: a. Deductible b. Premium c. Limit of liability d. None of the above

Premiums are the cost of insurance coverage and the insured's consideration. The correct answer is: Premium

All of the following acts are considered unfair trade practices, EXCEPT: Select one: a. Misrepresentation b. Replacement c. Rebating d. Coercion

Replacement is not, in itself, an illegal practice. It occurs when a new life insurance policy is written to take the place of an existing policy. It can rise to the level of twisting if a producer or insurer induces an insured through misrepresentation to lapse or surrender a policy in order to buy a similar policy from the selling producer or insurer. The correct answer is: Replacement

The three most important principles of insurance are:

Risk pooling, The law of large number, and insurable interest. Risk pooling: The insurance practice of combining similar losses from many people so that the average loss over the entire group is relativity constant.

Stock insurers pay dividends to: Select one: a. Policy owners b. Shareholders c. They don't pay dividends. d. Board of Directors

Stock insurers pay dividends to shareholders. The correct answer is: Shareholders

The Unfair Trade Practices Act is divided into which two parts? Select one: a. Unfair Marketing practices and Unfair Claims practices. b. All of the above. c. Unfair agent reporting and Unfair Insurer reporting. d. Unfair underwriting and Unfair representations.

The Unfair Trade Practices Act is divided into two parts: Unfair Marketing practices and Unfair Claims practices. The correct answer is: Unfair Marketing practices and Unfair Claims practices.

Which of the following correctly describes the law of large numbers? Select one: a. It states that poorer than average risks usually seek out insurance. b. It states that an insurer taking on too many risks will incur catastrophic losses. c. It predicts losses. d. It states that as a group's size increases, it is easier to predict the number of future losses over a specific time period.

The law of large numbers states that as the group increases in size, the easier it is to predict the number of future losses over a certain period of time. The correct answer is: It states that as a group's size increases, it is easier to predict the number of future losses over a specific time period.

The practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents is called: Select one: a. Twisting b. Misrepresentation c. Churning d. Intimidation

When a producer misrepresents a policy from the company he or she represents in order to induce a policyholder to replace it with another policy issued by the insurer, the producer has engaged in churning. He or she has recirculated funds and policies within their own company, generally in order to secure a first-year commission. The correct answer is: Churning

Reinsurance is defined as: Select one: a. Risk reduction b. Spreading risk from one insurer to another c. To make whole d. Adverse selection

When an insurer incurs too much loss, it can spread risk to another insurer. The correct answer is: Spreading risk from one insurer to another

It is illegal to do any of the following, EXCEPT: Select one: a. To entice business by offering to rebate premiums or offer special favors, dividend advantages, or any other benefits not specified in the contract to induce people to purchase life insurance or annuities b. To readjust premium rates, made retroactive for the policy year, for group insurance policies based on loss or expense c. To reject a client solely because another insurer has refused to write a policy on that person d. To require as a condition to granting a mortgage that the borrower purchase insurance to cover the property through a specific insurance producer or company

It is not considered to be a rebate or unfair discrimination to readjust premium rates retroactively for group insurance policies based on considerations of loss or expense. This is not based on prejudice, but fair business practices. The correct answer is: To readjust premium rates, made retroactive for the policy year, for group insurance policies based on loss or expense

Leo, a producer, sat down with a prospective client to discuss a long-term care policy. He used a computer program to outline and emphasize his remarks. The visual presentation contained the principal benefits of the policy he was trying to sell. Although he mentioned that it also had, the usual, conditions, he did not include those in his visual presentation or specify what they were. The producer was engaging in: Select one: a. Twisting b. Misrepresentation c. Coercion d. Rebating

Statements are deemed to be misrepresentations if, when taken in the context of the whole presentation, they may tend to mislead or deceive a person. By detailing only the benefits, the producer was not giving a fair representation of the policy. The correct answer is: Misrepresentation

*Authorized (admitted) -vs- Unauthorized (nonadmitted)* In order to sell insurance in a state, insurers must receive a license from that state's department of insurance. The license, called a *certificate of authority*, authorizes an insurer to sell insurance for particular lines (i.e., life, health, property, casualty, etc.) "An Insurer must have a Certificate of Authority to sell insurance."

*Admitted insurers* , also referred to as admitted or licensed insurers, are insurers who have received a certificate of authority authorizing them to transact insurance in a particular state for a particular line or lines of insurance. *Unauthorized insurers, also referred to as non-licensed or nonadmitted insurers,* are not allowed to transact insurance business in a particular state, *with the exception of excess and surplus lines insurers.* Unauthorized insurers do not have licensure because they have not yet applied, have applied and been denied licensure, *or are excess and surplus lines insurers.* Even though excess and surplus lines insurers are considered unauthorized insurers in a state, they are permitted to conduct insurance business in that state. "An Insurer must have a Certificate of Authority to sell insurance."

Defamation occurs when: Select one: a. An individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business b. An individual or entity acts to create a general action that in any way to intimidate an insurer in order to gain a monopoly in business c. An individual or entity refuses to insure or limit the amount of coverage only because another insurer has cancelled an existing policy on that person d. An individual or entity takes legal action against an insurer or producer

Defamation occurs when an individual or entity makes false, deliberately malicious and derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business. The individual literally _de fames_ the insurer _ i.e., robs the insurer of its fame or reputation. The correct answer is: An individual or entity makes false, derogatory statements about an insurer's financial condition that are calculated to injure the insurer's business

Don, an insurance agent, told a member of his church who had recently experienced several personal and financial losses that he could see that she got a more favorable rate on her insurance policies than her health and general circumstances would warrant. The woman had been his kindergarten teacher and was a pillar in the community's life. He wanted to help her. Which of the following is FALSE? Select one: a. The agent is compassionate. b. The agent was engaging in unfair discrimination. c. The agent was engaging in twisting. d. The agent was breaking the law.

Obviously, the agent is compassionate. He is also engaged in unfair discrimination because he is offering special rates to one member of a general class of assureds. In making this offer he is also breaking the law, which expressly forbids unfair discrimination. No insurance producer may unfairly discriminate between individuals of the same class and equal expectation of life in the rates charged for the policy or between individuals of the same class and of the same hazard in the amount of premium rates, in any manner whatsoever. What he is NOT doing was twisting, which involves a misrepresentation of facts (twisting of reality) in order to secure a sale. The correct answer is: The agent was engaging in twisting.

Which of the following is considered an unfair claims practice? Select one: a. Splitting a commission with a prospect b. Failing to affirm or deny coverage within a reasonable time after receiving proof of loss c. Convincing a policyholder to lapse or surrender an existing policy to sell another policy d. Making any oral or written statement that is false, maliciously critical, or calculated to injure a competing producer

Splitting a commission, convincing a policyholder to lapse or surrender an existing policy so the agent may sell another policy; making statements that are false, maliciously critical, or calculated to injure a competing producer are all unfair marketing practices. Failing to acknowledge coverage within a reasonable time after receiving proof of loss is an unfair claims practice. The correct answer is: Failing to affirm or deny coverage within a reasonable time after receiving proof of loss

Transferring uncertainty of loss to the insurance company is the definition of: Select one: a. Risk pooling b. The law of large numbers c. Insurance d. None of the above

Insurance transfers an individual's uncertainty of loss to the insurance company. The correct answer is: Insurance

*Unfair Marketing Practices* Discrimination, Unfair Discrimination, Boycott (intimidation by refusing to do business) , Coercion (manipulating with something desirable), and Intimidation (manipulation through the threat of a negative result), Penalties (The Commissioner may issue a cease and desist order.)

*Discrimination*;Discrimination is a necessary part of the insurance business. So long as these principles are applied equally to each and every applicant or policyholder, discrimination is fair. When these principles are applied only to certain individuals within a group, the discrimination is unfair. *Unfair Discrimination*Unfair discrimination is the unequal application of the principles used to approve, rate, set premiums, and issue insurance policies. Every state has laws prohibiting unfair discrimination in insurance. In general, they state that no insurance producer may unfairly discriminate between individuals of the same class and equal expectation of life in the rates charged for the policy or between individuals of the same class and of the same hazard in the amount of premium rates, in any manner whatsoever. *Denying coverage or charging a different premium based on race, martial status, or blindness is illegal.* -*Boycott, Coercion, and Intimidation*; They use power unethically and unprofessionally to attempt to force a company or individual to behave in a certain way. The difference is the means used to get the desired result. *Coercion*; Coercion generally manipulates through the prospect of something desirable. An agent's subtly suggested offer to recommend the prospective client for membership in a selective club if the person purchases a particular policy is coercive, for instance. *Boycott* Boycott is a form of intimidation in which an individual or group refuses to do business with a company or individual, either to drive them out of business or to force them to act in certain way. *Intimidation* manipulates through the threat of a negative result. The loss of business and the denial of coverage are examples of intimidation. *Penalties*; Following an investigation and a hearing, if the Department of Insurance finds that any person or insurer is engaged in any unfair marketing or unfair claims practice, the Commissioner may issue a cease and desist order prohibiting the individual or company from continuing the practice. Failure to comply with the cease and desist order can result in a substantial fine. In addition, fines and loss of license may also be imposed for a company or person guilty of violating the Unfair Trade Practices Act.

*Unfair Marketing Practices* Misrepresentation (lie), Defamation (tainting reputation) , Rebating (bribe)

*Misrepresentation*; Any written or oral statement that does not accurately describe a policy's benefits, conditions, or coverage is considered a misrepresentation. *A misrepresentation is simply a lie.* -Any statement representing a health discount plan (HMO) as a form of insurance is a misrepresentation. -Relating only the benefits and not including a description of conditions or limitations is misrepresenting the policy. -Suggesting a policy is better suited for a prospective applicant than the facts would indicate to a reasonable person is misrepresentation. *Defamation*; Defamation is any false, maliciously critical, or derogatory communication - written or oral - that injures another's reputation, fame, or character. Both individuals and companies can be defamed. *Rebating*; Rebating occurs if a buyer of an insurance policy is given anything of significant value as an inducement to purchase or renew a policy. Any inducement in the sale of insurance that is not specified in the insurance contract itself is a rebate. For instance, splitting a commission with a prospect is not a part of the insurance contract and, therefore, constitutes a rebate. Rebates include not only cash, but also personal services or items of value. Keep in mind that most states do not consider a small token gift, under $25.00, used for advertising is not considered rebating.

Producers, Agents, Brokers, Solicitors, and Consultants

*Producers* Producers are people who sell, solicit and negotiate insurance. This term encompasses agents and brokers. In some states, solicitors are licensed to work as insurance producers. *Agents* Agents are insurance producers who represent the insurer, not the insured. *Life and health agents cannot bind insurance* (commit insurers to provide coverage by a written or oral agreement); however, *property and casualty agents can bind insurance.* *Brokers* Brokers are insurance producers who *represent the insured, not the insurer.* Brokers work for several different insurers. Brokers' duties are similar to agents' in soliciting coverage, collecting applications and initial premiums, and delivering policies; however, brokers cannot bind insurance. Solicitors Solicitors are licensed salespeople who work for an agent or broker. Solicitors perform the duties of brokers; however, like brokers, they cannot bind coverage. *Consultants* Consultants provide insurance advice to insureds for a fee. Consultants work for insureds, not insurers.

*Unfair Marketing Practices* Twisting (persuading/twisting the truth to deceive the policy owner for the twisters gain), Churning (lying to induce a policy owner; Churning occurs within the same company.) False Financial Statements ( deliberately make a false financial statement to deceive others)

*Twisting*; Twisting is the unethical act of persuading a policyowner to drop a policy solely for the purpose of selling another policy without regard to possible disadvantages to the policyowner. By definition, twisting involves some kind of misrepresentation - or "twisting" of the truth - by the producer to convince the policyowner to switch insurance companies. Often, it involves encouraging an insured to lapse on their current policy and to take out another. *Churning*; Churning is the practice of using misrepresentation to induce a policyholder to replace a policy issued by the insurer the producer represents, rather than the policy of a competitor. The objective of churning is to allow the producer to collect a large first-year commission on a new policy. *Whereas twisting involves the policies and revenues of another insurer, churning occurs within the same company.* Churning is the result of a producer putting their own interests above those of the client and the company for whom he is an agent. *False Financial Statements*; It is a violation of unfair marketing practices for any person to deliberately make a false financial statement regarding the solvency of an insurer with the intent to deceive others.

A local insurance company has worked closely with an area real estate firm in writing mortgage insurance as well as other insurances such as health and accident policies to newcomers in a small university town. Recently one of the town's oldest and most reliable banks has become cautious about making mortgage loans, and both the realtors and the insurance company have lost business as a result. They agree to change their own accounts to a newer bank with a more liberal lending policy and to encourage their clients to follow their course. Since it is a small town with a sizable number of newcomers who visit the real estate firm for rentals or home purchases, their combined action is likely to affect the older, more conservative lender. The practice in which they are engaging is: Select one: a. Unfair discrimination b. Defamation c. Derogation d. Boycott

In joining with the real estate firm to boycott the older bank, refusing to recommend it to its clients or to associate with it in business dealings, the insurance company is seeking to diminish its financial power. The insurer is engaged in an illegal activity. The correct answer is: Boycott

In the underwriting of insurance policies, some amount of discrimination is: Select one: a. Present in many cases, because of differing levels of risk b. Illegal in all cases c. Forbidden by federal statutes d. Permissible only when two people of equal risk are charged different rates

Legitimate discrimination must occur in underwriting of an insurance policy. For instance, two individuals of the same race and sex may present very different risks to an insurer and will be charged different rates based on credible supporting information. Unfair discrimination exists when two people of equal risk are charged different rates or provided different services and benefits solely because of a difference in race, religion, national origin, or where they live. Unfair discrimination is illegal. The correct answer is: Present in many cases, because of differing levels of risk

All of the following, if performed frequently enough to indicate a general business practice, are unfair claims settlement practices, EXCEPT: Select one: a. Requiring submission of preliminary claim report or a formal proof of loss before paying a claim. b. Threatening a client in order to discourage their effort to recover a loss. c. Failing to acknowledge with reasonable promptness communications regarding claims. d. Knowingly misrepresenting to claimants pertinent facts relating to coverages.

Requiring submission of preliminary claim report or a formal proof of loss before paying a claim is standard practice and not an unfair claim practice. *Delaying the investigation or payment of a claim by requiring an insured, claimant, or the physician of either to submit a preliminary claim report and then requiring the subsequent submission of formal proof of loss forms, both of which submissions contain substantially the same information;* The correct answer is: Requiring submission of preliminary claim report or a formal proof of loss before paying a claim.

What consequences does an insurer's or producer's use of unfair marketing or unfair claims habits have for the company or agent? Select one: a. They can be sued in criminal court for malfeasance. b. The State Commissioner of Insurance can issue a cease and desist order. c. The insurer and the producer can be sued in a civil court of neglect of ethical duty. d. The State Insurance Commission can reprimand the company and/or producer.

The State Commissioner of Insurance can issue a cease and desist order, requiring company and agent to correct their actions immediately. Should they defy this order, they can be fined substantially and denied the right to practice in a state. The correct answer is: The State Commissioner of Insurance can issue a cease and desist order.

In a conversation with an older family friend, an insurance agent, Sly, inquired with what company she had a Medicare supplement policy. When she told him, the agent was silent. Concerned by his silence, the woman asked if the company was a reliable company. The producer asked, "Have you received any financial statements regarding their solvency?" This producer was: Select one: a. Acting appropriately by refusing to comment personally on the competing insurance company b. Engaging in misrepresentation c. Engaging in defamation d. Engaging in churning

The agent was engaging in defamation. The agent did not have to state literally that the company was possibly weak, which was implied within the context of the conversation. The correct answer is: Engaging in defamation

In life and health insurance, a person's greatest asset is: Select one: a. Their earning power b. Insurance c. The law of large numbers d. Risk pooling

The purpose of life and health insurance is to protect an insured against loss to their greatest asset, which is their earning power. Medical bills and lost income are risks covered by life and health insurance policies, protecting the insured against the uncertainty of financial loss from economic death. The correct answer is: Their earning power

Presented with a completed claim form, an insurer wrote to the insured claimant requesting a preliminary claim report from the physician. Upon receipt of that report, the insurer required the subsequent submission of a proof-of-loss form. Was this insurer acting within its legal and ethical rights? Select one: a. Yes, settlement of claims can take time. b. No, the two forms provide the same information. This is a delaying action and thus illegal. c. No, these demands imply a threat on the part of the insurer. d. No, the insurer is failing to acknowledge with reasonable promptness communications regarding claims.

The two forms provide substantially the same information. Most likely, therefore, the request is simply an effort on the part of the insurer to delay settling a legitimate claim in a prompt, fair, and equitable manner to effect prompt, fair, and equitable. This delaying action is identified as illegal in most state codes. The correct answer is: No, the two forms provide the same information. This is a delaying action and thus illegal.

An example of an unfair claim settlement practice would include: Select one: a. Denying the payment of a claim because it does not meet the conditions of the insurance contract b. Delaying the payment of a claim while it is investigated for possible fraud c. Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer d. Denying the claim because it occurred after the cancellation of the policy

Trying to discourage a claimant from arbitrating a claim by implying that arbitration might result in an award lower than the amount offered is an unfair claim settlement practice. The correct answer is: Advising a claimant of the possibility that, should the claimant reject a settlement offer, an arbitration award might be less than the offer

In discussing a potentially lucrative group policy with a business owner who had purchased a business and just moved into the community, an established producer jokingly remarked, "Well, would it sweeten the pot if I could assure you membership in the country club?"The producer added, "I'm on the membership committee and while we're not accepting new application right now, I'm sure something could be worked out." These remarks constituted: Select one: a. Nothing more than an effort to establish a warm relationship with the potential client b. Misrepresentation c. Rebating d. Intimidation

While it is possible a little intimidation was intended in the producer's mention of serving on the membership committee of the closed club, it is clearer the producer is engaging in rebating. The producer is offering something that can have significant value to a new member of the business community (club membership) as a bonus for the purchase of a policy. The offer to, sweeten the pot, was clear and the context of the following conversation made it unmistakable rebating. Obviously the producer did not intend to include that service in the insurance contract. Any inducement in the sale of insurance that is not specified in the insurance contract itself is a rebate. The correct answer is: Rebating