Commissions, Commission Sharing and Rebating
No insurer or insurance producer may pay a commission, service fee, brokerage or other valuable consideration to a person for selling, soliciting or negotiating insurance in South Dakota if that person is not already licensed.
Renewal of other deferred commissions may be paid to a person if the person was required to be licensed and was at the time of the sale. If a person moves from this state and is subsequently contacted by a former client, the producer must obtain a license to sell, solicit or negotiate insurance on behalf of that customer.
An insurer or insurance producer may pay or assign a commission, service fee, brokerage, nominal fee of a fixed dollar amount for each referral that does not depend on whether the referral results in a transaction or sale, or other valuable consideration, to an insurance agency or to persons who do not sell, solicit or negotiate insurance in this state, unless the payment would violate anti-rebating statutes.
A general agent who receives only a commission override for business produced by persons he or she solicited as producers and has no involvement whatsoever in the sale, solicitation or negotiation of insurance does not have to obtain a license or appointment with that same insurer. For example, if the general agent has direct contact with the client or receives applications or receives premiums, that general agent must obtain a license and appointment as they would in fact be selling, soliciting or negotiating insurance.