What term describes the act of returning a portion of a premium to induce the purchase of insurance?

The act of returning a portion of a premium to induce the purchase of insurance is termed rebating. This practice involves an insurer or agent offering a part of the premium back to the insured as an incentive to buy a policy. Rebating is generally addressed by various insurance regulations because it can create unfair competition and mislead consumers regarding the true cost and benefits of insurance products.

In many jurisdictions, including West Virginia, rebating can be illegal or subject to strict regulations. Insurers and agents must comply with these laws to ensure that consumers are treated fairly and that the insurance market remains competitive.

Premium adjustment, commission sharing, and discounting do not accurately define this specific act. Premium adjustment typically refers to the process of changing the premium amount based on various factors or circumstances. Commission sharing usually involves splitting commissions between agents or brokers for a sale but does not relate to returning premium amounts to the customer. Discounting refers to providing a reduced rate on the premium but does not involve returning a portion of the payment already made. Thus, rebating is the precise term that encapsulates the act described in the question.