[stale2002]

Honest question. Why is charging consumers higher prices the "ethical" thing to do? Giving "kickbacks" is just another word for "charging customers less money".

Is the issuance industry so messed up that choosing to not screw over consumers is considered "unethical".

[mrkurt]

The health insurance industry is heavily regulated. Typically regulation begets more regulation, it's conceivable that they've limited insurance cos in such a way that the inducement restriction for brokers makes sense.

You definitely want insurance companies competing on price, but you may not want insurance brokers arbitrarily giving out rebates.

Imagine (and this is totally made up) that the insurance companies give brokers higher commissions at higher volumes; if that were the case, and brokers could give rebates, there are times a broker would push one insurance company's plan over another's simply to hit a sales incentive. That's probably not good for the people buying insurance. Part of the broker's job is to give good advice.

[fatbird]

In the retail world, there's now far, far less corruption than there used to be. When buyers from Home Depot came to visit my employer, they wouldn't even accept a soda because there was a strict, zero tolerance, no receiving anything from a manufacturer policy.

This was driven initially by Walmart, which has a similar policy, because executives at Walmart realized that if manufacturers were bribing their buyers, the cost of those kickbacks was being built back into the price of the product. By loudly (and actually) having and enforcing a "no taking anything" policy, they could then demand further price reductions. This is now widespread.

A broker offering kickbacks or discounts is recouping the cost somewhere. If the product is the same but they're cheaper by the broker, then it's likely that the product isn't the same in fact--perhaps there's some special rider in the contract, or maybe the broker just knows how to slow-walk or otherwise chip away at claims. The insurance industry is famous for some parties failing to provide the future service you're purchasing on technicalities or just bureaucratic abuse.

In a market where expert assistance is needed, and end users can't fully protect themselves with informed purchasing, requiring parties offering the same service to charge the same price is a way of forcing honest dealing. That's the idea, anyway.

[svachalek]

Insurance itself isn't a consumer-friendly product without regulation. It's too easy to make a lot of sales and just disappear when the going gets tough. One bad player can run all the good ones out of business by out-"competing" them. I wouldn't be surprised if there are similar games to play in the insurance broker business but I'm not sure how it's done.

[icebraining]

Wouldn't it make more sense to impose a capital requirement, like on banks? E:g. if you're insuring for $X in total value, you need to at least keep $Y in a fund.

[st3v3r]

>Giving "kickbacks" is just another word for "charging customers less money".

No, it's not. It's another word for bribing the person in the company in charge of selecting insurance.