Final answer:
Rebating is the prohibited sales practice that occurs when a producer offers something of value in return for the purchase of an insurance policy.
Step-by-step explanation:
When a producer offers something of value in return for the purchase of an insurance policy, the prohibited sales practice that has been committed is called rebating. Rebating occurs when an insurance company or agent offers a policyholder something of value, such as cash or gifts, as an inducement for purchasing an insurance policy. It is considered a prohibited practice because it undermines the principles of fair competition in the insurance market.
An example of rebating would be if an insurance agent offered a free gift card to a customer who purchased a car insurance policy. This practice is illegal because it can distort the market by influencing customers to choose a policy based on the additional incentives rather than the coverage and suitability of the policy itself.