Which statement about the Alabama Insurance Guaranty Association is false?

The statement indicating that the Alabama Insurance Guaranty Association allows rebating to entice customers is false. The Alabama Insurance Guaranty Association (AIGA) is designed to protect policyholders and claimants in the event that an insurance company becomes insolvent. Its primary role is to cover claims that are made against insurers that can no longer meet their financial obligations due to bankruptcy or insolvency.

Rebating, which involves returning a portion of the premium to the customer as an incentive to purchase insurance or renew a policy, is prohibited in Alabama. This practice can lead to unfair competition and undermines the integrity of the insurance market. As a result, the existence of a program like AIGA, which is focused on consumer protection against insurer failure, does not relate to practices such as rebating that are not allowed under Alabama insurance law. This clarification underscores the purpose of the AIGA in safeguarding the interests of policyholders rather than facilitating marketing practices that could mislead or affect the insurance marketplace.