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Division of Insurance - Producer Information
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.
South Dakota does not permit rebating. Anti-rebating statutes are South Dakota Codified Law (SDCL) 58-33-14 and SDCL 58-33-24.
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.
Insurance producers may charge a consulting fee from insurance customers but may not collect a commission and a fee on the same product with the same consumer. See Bulletin 13-04 for further guidance on consulting fees.
Licensed and appointed insurance producers may share compensation with other producers licensed in the same line of business for which the original commission was received.
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 an appointment with that same insurer. 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.
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