DFS Discusses Charitable Contributions by Agents
The Department of Financial Services recently issued a reminder relating to its view of charitable contributions made by licensees. This is a subject that arises from time to time, wherein licensees such as insurance agents want to show their support for charities. DFS certainly does not want to deter agents from being actively involved in charitable endeavors within their communities. However, DFS cautions agents not to use charitable contributions as inducements to transact business.
According to DFS, a licensee cannot advertise that it will make a charitable contribution on behalf of a potential or existing client. An agent may make charitable contributions of his or her choosing, but using those contributions to lure new clients or retain existing clients is considered an unlawful inducement to purchase insurance. DFS advises, “Although the client would not receive a direct monetary gift, the act of advertising the contribution and linking it to a quote for or purchase of insurance meets the criteria of an unlawful inducement.” DFS further states that agencies are free to advertise that they contribute to a specific interest or charity, but cannot link those contributions to a potential or existing client.