Model
Regulation Service—April 1999
ADVERTISEMENTS
OF ACCIDENT AND SICKNESS
INSURANCE MODEL
REGULATION
Table
of Contents
Section
1. Purpose
Section
2. Applicability
Section
3. Definitions
Section
4. Method of Disclosure of
Required Information
Section
5. Form and Content of
Advertisements
Section
6. Advertisement of Benefits
Payable, Losses Covered by Premiums Payable
Section
7. Necessity for Disclosing Policy
Provisions Relating to
Renewability,
Cancellability and Termination
Section 8. Standards for Marketing
Section
9. Testimonials or Endorsements by
Third Parties
Section
10. Use of Statistics
Section
11. Identification of Plan or Number
of Policies
Section
12. Disparaging Comparisons and
Statements
Section
13. Jurisdictional Licensing and
Status of Insurer
Section
14. Identity of Insurer
Section
15. Group or Quasi-Group
Implications
Section
16. Introductory, Initial or Special
Offers
Section
17. Statements about an Insurer
Section
18. Enforcement Procedures
Section
19. Severability Provision
Section
20. Filing for Prior Review
Section 1. Purpose
The
purpose of the Advertisements of Accident and Sickness Insurance Model
Regulation is to establish minimum criteria to assure proper and accurate
description and to protect prospective purchasers with respect to the
advertisement of accident and sickness insurance in the same manner as the
regulation governing advertisements of Medicare supplement insurance. This
regulation assures the clear and truthful disclosure of the benefits,
limitations and exclusions of policies sold as accident and sickness insurance
by the establishment of standards of conduct in the advertising of accident and
sickness insurance in a manner that prevents unfair, deceptive and misleading
advertising and is conducive to accurate presentation and description to the
insurance-buying public through the advertising media and material used by
insurance agents and companies.
Section 2. Applicability
A. This regulation shall apply to
individual and group accident and sickness insurance (except Medicare
supplement insurance or any other insurance that is covered by a separate state
statute) “advertisement,” as that term is defined in Section 3B, G, H and I
unless otherwise specified in this regulation, which the insurer knows or
reasonably should know is intended for presentation, distribution or
dissemination in this state when the presentation, distribution or
dissemination is made either directly or indirectly by or on behalf of an
insurer, agent, broker, producer or solicitor, as those terms are defined in
the Insurance Code of this state.
Drafting
Note: This regulation applies to group
and blanket as well as individual accident and sickness insurance. Certain
distinctions, however, are applicable to these categories. Among these distinctions
is the insureds' level of familiarity with insurance and insurance terminology,
a factor that is covered in Section 5C.
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B. Every insurer shall establish and at
all times maintain a system of control over the content, form and method of
dissemination of all advertisements of its policies. All of the insurer's
advertisements, regardless of by whom written, created, designed or presented,
shall be the responsibility of the insurer whose policies are advertised.
C. Advertising materials that are
reproduced in quantity shall be identified by form numbers or other identifying
means. The identification shall be sufficient to distinguish an advertisement
from any other advertising materials, policies, applications or other materials
used by the insurer.
Section 3. Definitions
A. (1) “Accident
and sickness insurance policy” means a policy, plan, certificate, contract,
agreement, statement of coverage, rider or endorsement that provides accident
or sickness benefits or medical, surgical or hospital benefits, whether on an
indemnity, reimbursement, service or prepaid basis, except when issued in
connection with another kind of insurance other than life and except
disability, waiver of premium and double indemnity benefits included in life
insurance and annuity contracts. An accident and sickness insurance policy does
not include a Medicare supplement insurance policy, or any other type of
accident and sickness insurance with advertising guidelines covered by a
separate statute.
(2) The
language “except disability, waiver of premium and double indemnity benefits
included in life insurance and annuity contracts” means it does not include
disability, waiver of premium and double indemnity benefits included in life
insurance, endowment or annuity contracts or contracts supplemental to the
above contracts that contain only provisions that:
(a) Provide additional benefits in case of
death or dismemberment or loss of sight by accident; or
(b) Operate to safeguard the contracts against
lapse or to give a special surrender value, special benefit or an annuity in
the event that the insured or annuitant shall become totally and permanently
disabled as defined by the contract or supplemental contract.
B. (1) “Advertisement”
means:
(a) Printed and published material, audio
visual material, and descriptive literature of an insurer used in direct mail,
newspapers, magazines, radio scripts, TV scripts, web sites and other Internet
displays or communications, other forms of electronic communications,
billboards and similar displays;
(b)
Descriptive
literature and sales aids of all kinds issued by an insurer, agent, producer,
broker or solicitor for presentation to members of the insurance-buying public,
such as circulars, leaflets, booklets, depictions, illustrations, form letters
and lead-generating devices of all kinds; and
Model
Regulation Service—October 2003
(c) Prepared sales talks, presentations and
material for use by agents, brokers, producers and solicitors whether prepared
by the insurer or the agent, broker, producer or solicitor.
(2) The definition of “advertisement”
includes advertising material included with a policy when the policy is
delivered and material used in the solicitation of renewals and reinstatements.
(3) The definition of advertisement extends
to the use of all media for communications to the general public, to the use of
all media for communications to specific members of the general public, and to
the use of all media for communications by agents, brokers, producers and
solicitors.
(4) The definition of advertisement does not include:
(a) Material used solely for the training
and education of an insurer’s employees, agents or brokers;
(b) Material used in-house by insurers;
(c) Communications within an insurer’s own
organization not intended for dissemination to the public;
(d) Individual communications of a personal
nature with current policyholders other than material urging the policyholders
to increase or expand coverages;
(e) Correspondence between a prospective
group or blanket policyholder and an insurer in the course of negotiating a
group or blanket contract;
(f) Court-approved material ordered by a
court to be disseminated to policyholders; or
(g)
A
general announcement from a group or blanket policyholder to eligible
individuals on an employment or membership list that a contract or program has
been written or arranged; provided that the announcement clearly indicates that
it is preliminary to the issuance of a booklet and that the announcement does
not describe the specific benefits under the contract or program nor describe
advantages as to the purchase of the contract or program. This does not
prohibit a general endorsement of the program by the sponsor.
C. “Certificate” meansa statement of the
coverage and provisions of a policy of group accident and sickness insurance,
which has been delivered or issued for delivery in this state and includes
riders, endorsements and enrollment forms, if attached.
D. “Exception” means any provision in a
policy whereby coverage for a specified hazard is entirely eliminated; it is a
statement of a risk not assumed under the policy.
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E. “Insurer” means an individual,
corporation, association, partnership, reciprocal exchange, inter-insurer,
Lloyds, fraternal benefit society, health maintenance organization, hospital
service corporation, medical service corporation, prepaid health plan and any
other legal entity that is defined as an insurer in the insurance code of this
state, and is engaged in the advertisement of itself or an accident and
sickness insurance policy.
F. “Institutional advertisement” means an
advertisement having as its sole purpose the promotion of the reader’s,
viewer’s or listener’s interest in the concept of accident and sickness
insurance, or the promotion of the insurer as a seller of accident and sickness
insurance.
G. “Invitation to contract” means an
advertisement that is neither an invitation to inquire nor an institutional
advertisement.
H. “Invitation to inquire” means:
(1) An advertisement having as its objective
the creation of a desire to inquire further about accident and sickness
insurance and that is limited to a brief description of the loss for which
benefits are payable but may contain:
(a) The dollar amount of benefits payable;
and
(b) The period of time during which benefits
are payable.
(2) An invitation to inquire may not refer to cost.
(3) An invitation to inquire shall contain a
provision in the following or substantially similar form:
“This policy has [exclusions]
[limitations] [reduction of benefits] [terms under which the policy may be
continued in force or discontinued]. For costs and complete details of the coverage,
call [or write] your insurance agent or the company [whichever is applicable].”
I. “Lead-generating device” means any
communication directed to the publicthat, regardless of form, content or stated
purpose, is intended to result in the compilation or qualification of a list
containing names and other personal information to be used to solicit residents
of this State for the purchase of accident and sickness insurance.
J. “Limitation” means a provision that
restricts coverage under the policy other than an exception or a reduction.
K. “Limited benefit health coverage” shall
have the same meaning as defined in [insert reference to state law equivalent
to Section 7L of the NAIC Model Regulation to Implement the Accident and
Sickness Insurance Minimum Standards Act].
L. Person” means a natural person,
association, organization, partnership, trust, group, discretionary group,
corporation or any other entity.
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Regulation Service—April 1999
M: “Prominently” or “conspicuously” means
that the information to be disclosed prominently or conspicuously will be
presented in a manner that is noticeably set apart from other information or
images in the advertisement.
N.
“Reduction”
means a provision that reduces the amount of the benefit; a risk of loss is assumed
but payment upon the occurrence of the loss is limited to some amount or period
less than would be otherwise payable and the reduction has not been used.
Section 4. Method of Disclosure of Required
Information
All
information, exceptions, limitations, reductions and other restrictions
required to be disclosed by this regulation shall be set out conspicuously and
in close conjunction to the statements to which the information relates or
under appropriate captions of such prominence that it shall not be minimized,
rendered obscure or presented in an ambiguous fashion or intermingled with the
context of the advertisements so as to be confusing or misleading. This
regulation permits, but is not limited to, the use of either of the following
methods of disclosure:
A. Disclosure in the description of the
related benefits or in a paragraph set out in close conjunction with the
description of policy benefits; or
B. Disclosure not in conjunction with the
provisions describing policy benefits but under appropriate captions of such
prominence that the information shall not be minimized, rendered obscure or
otherwise made to appear unimportant. The phrase “under appropriate captions”
means that the title must be accurately descriptive of the captioned material.
Appropriate captions include the following: “Exceptions,” “Exclusions,”
“Conditions Not Covered,” and “Exceptions and Reductions.” The use of captions
such as the following are prohibited because they do not provide adequate
notice of the significance of the material: “Extent of Coverage,” “Only these
Exclusions,” or “Minimum Limitations.”
Drafting
Note: In considering whether an
advertisement complies with the disclosure requirements of this regulation, the
regulation must be applied in conjunction with the form and content standards
contained in Section 5.
A. The format and content of an
advertisement of an accident or sickness insurance policy shall be sufficiently
complete and clear to avoid deception or the capacity or tendency to mislead or
deceive. Format means the arrangement of the text and the captions.
B. Distinctly different advertisements are
required for publication in different media, such as newspapers or magazines of
general circulation as compared to scholarly, technical or business journals
and newspapers. Where an advertisement consists of more than one piece of
material, each piece of material must, independent of all other pieces of
material, conform to the disclosure requirements of this regulation.
C. Whether an advertisement has a capacity
or tendency to mislead or deceive shall be determined by the commissioner from
the overall impression that the advertisement may be reasonably expected to
create within the segment of the public to which it is directed.
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Drafting
Note: These subsections must be applied in
conjunction with Sections 1 and 4. These subsections refer specifically to
format and content of the advertisement and the overall impression created by
the advertisement. This involves factors such as the size, color and prominence
of type used to describe benefits.
D. Advertisements shall be truthful and
not misleading in fact or in implication. Words or phrases, the meaning of
which is clear only by implication or by familiarity with insurance
terminology, shall not be used.
Drafting
Note: This subsection prohibits the use of
incomplete statements and words or phrases that have the tendency or capacity
to mislead or deceive because of the reader’s unfamiliarity with insurance
terminology. Therefore, words, phrases and illustrations used in an
advertisement must be clear and unambiguous and, if the advertisement uses
insurance terminology, sufficient description of a word, phrase or illustration
shall be provided by definition or description in the context of the
advertisement. As stated in Subsection C, distinctly different levels of
comprehension of the subscribers of various publications may be anticipated.
E. An insurer shall clearly identify its
accident and sickness insurance policy as an insurance policy. A policy trade
name shall be followed by the words “insurance policy” or similar words clearly
identifying the fact that an insurance policy or health benefits product (in
the case of health maintenance organizations, prepaid health plans and other
direct service organizations) is being offered.
F. An insurer, agent, broker, producer,
solicitor or other person shall not solicit a resident of this state for the
purchase of accident and sickness insurance in connection with or as the result
of the use of advertisement by the person or any other persons, where the
advertisement:
(1) Contains any misleading representations
or misrepresentations, or is otherwise untrue, deceptive or misleading with
regard to the information imparted, the status, character or representative
capacity of the person or the true purpose of the advertisement; or
(2) Otherwise violates the provisions of this regulation.
G. An insurer, agent, broker, producer,
solicitor or other person shall not solicit residents of this State for the
purchase of accident and sickness insurance through the use of a true or
fictitious name that is deceptive or misleading with regard to the status, character
or proprietary or representative capacity of the person or the true purpose of
the advertisement.
Section 6. Advertisements of Benefits Payable,
Losses Covered or Premiums Payable
A. Covered Benefits.
(1) The
use of deceptive words, phrases or illustrations in advertisements of accident
and sickness insurance is prohibited.
Drafting
Note: This broad provision may be deleted
if your state has enacted an Unfair Trade Practices Act that contains the same
prohibitions.
(2) An advertisement that fails to state
clearly the type of insurance coverage being offered is prohibited.
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Regulation Service—April 1999
(3) An advertisement shall not omit
information or use words, phrases, statements, references or illustrations if
the omission of information or use of words, phrases, statements, references or
illustrations has the capacity, tendency or effect of misleading or deceiving
purchasers or prospective purchasers as to the nature or extent of any policy
benefit payable, loss covered or premium payable. The fact that the policy
offered is made available to a prospective insured for inspection prior to
consummation of the sale or an offer is made to refund the premium if the
purchaser is not satisfied, does not remedy misleading statements.
(4) An advertisement shall not contain or
use words or phrases such as “all,” “full,” “complete,” “comprehensive,”
“unlimited,” “up to,” “as high as,” “this policy will help fill some of the
gaps that Medicare and your present insurance leave out,” “the policy will help
to replace your income,” (when used to express loss of time benefits), or
similar words and phrases, in a manner that exaggerates a benefit beyond the
terms of the policy.
Drafting
Note: An advertisement shall not state or
imply by word, phrase or illustration that the benefits being offered will
supplement any other insurance policy, health benefit plan, or governmental
plan if that is not the fact.
(5) An advertisement of a hospital or other
similar facility confinement benefit that makes reference to the benefit being
paid directly to the policyholder is prohibited unless, in making the
reference, the advertisement includes a statement that the benefits may be paid
directly to the hospital or other health care facility if an assignment of
benefits is made by the policyholder. An advertisement of medical and surgical
expense benefits shall comply with this regulation in regard to the disclosure
of assignments of benefits to providers of services. Phrases such as “you
collect,” “you get paid,” “pays you,” or other words or phrases of similar
import may be used so long as the advertisement indicates that it is payable to
the insured or someone designated by the insured.
(6) (a) An
advertisement for basic hospital expense coverage, basic medical-surgical
expense coverage, basic hospital/medical-surgical expense coverage, hospital
confinement indemnity coverage, accident only coverage, specified disease
coverage, specified accident coverage or limited benefit health coverage or for
coverage that covers only a certain type of loss is prohibited if:
(i) The advertisement refers to a total
benefit maximum limit payable under the policy in any headline, lead-in or
caption without also in the same headline, lead-in or caption specifying the
applicable daily limits and other internal limits;
(ii) The advertisement states a total benefit
limit without stating the periodic benefit payment, if any, and the length of
time the periodic benefit would be payable to reach the total benefit limit; or
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of Accident and Sickness Insurance Model Regulation
(iii) The advertisement prominently displays a
total benefit limit that would not, as a general rule, be payable under an
average claim.
(b) This paragraph does not apply to
individual major medical expense coverage, individual basic medical expense
coverage, or disability income insurance.
(7) Advertisements that emphasize total
amounts payable under hospital, medical or surgical accident and sickness
insurance coverage or other benefits in a policy, such as benefits for private
duty nursing, are prohibited unless the actual amounts payable per day for the
indemnity or benefits are stated.
(8) Advertisements that include examples of
benefits payable under a policy shall not use examples in a way that implies
that the maximum payable benefit payable under the policy will be paid, when
less than maximum benefits are paid in an average claim.
(9) When a range of benefit levels is set
forth in an advertisement, it shall be clear that the insured will receive only
the benefit level written or printed in the policy selected and issued.
Language that implies that the insured may select the benefit level at the time
of filing claims is prohibited.
(10) Language in an advertisement that implies
that the amount of benefits payable under a loss-of-time policy may be
increased at the time of claim or disability according to the needs of the
insured is prohibited.
(11) Advertisements for policies with premiums
that are modest because of their limited coverage or limited amount of benefits
shall not describe premiums as “low,” “low cost,” “budget” or use qualifying
words of similar import. The use of words such as “only” and “just” in
conjunction with statements of premium amounts when used to imply a bargain are
prohibited.
(12) Advertisements that state or imply that
premiums will not be changed in the future are prohibited unless the advertised
policies expressly provide that the premiums will not be changed in the future.
(13) An advertisement for a policy that does
not require the premium to accompany the application shall not overemphasize
that fact and shall clearly indicate under what circumstances coverage will
become effective.
(14) An advertisement that exaggerates the
effects of statutorily mandated benefits or required policy provisions or that
implies that the provisions are unique to the advertised policy is prohibited.
Drafting
Note: For example, the phrase, “money back
guarantee” is an exaggerated description of the free look right to examine the
policy and is prohibited.
(15) An advertisement that implies that a
common type of policy or a combination of common benefits is “new,” “unique,”
“a bonus,” “a breakthrough,” or is otherwise unusual is prohibited. The
addition of a novel method of premium payment to an otherwise common plan of
insurance does not render it new.
Model
Regulation Service—April 1999
(16) Language in an advertisement that states
or implies that each member under a family contract is covered as to the
maximum benefits advertised, where that is not the fact, is prohibited.
(17) An advertisement that contains statements
such as “anyone can apply,” or “anyone can join,” other than with respect to a
guaranteed issue policy for which administrative procedures exist to assure
that the policy is issued within a reasonable period of time after the
application is received by the insurer, is prohibited.
(18) An advertisement that states or implies
immediate coverage of a policy is prohibited unless administrative procedures
exist so that the policy is issued within fifteen (15) working days after the
insurer receives the completed application.
(19) An advertisement that contains statements
such as “here is all you do to apply,” or “simply” or “merely” to refer to the
act of applying for a policy that is not a guaranteed issue policy is
prohibited unless it refers to the fact that the application is subject to
acceptance or approval by the insurer.
(20) An advertisement of accident and sickness
insurance sold by direct response shall not state or imply that because no
insurance agent will call and no commissions will be paid to agents that it is
a low cost plan, or use other similar words or phrases because the cost of
advertising and servicing the policies is a substantial cost in the marketing
by direct response.
(21) Applications, request forms for
additional information and similar related materials are prohibited if they
resemble paper currency, bonds, stock certificates, etc., or use any name,
service mark, slogan, symbol or device in a manner that implies that the
insurer or the policy advertised is connected with a government agency, such as
the Social Security Administration or the Department of Health and Human
Services.
Drafting
Note: Illustrations that depict paper
currency or checks showing an amount payable are deceptive and misleading.
(22) An advertisement that implies in any
manner that the prospective insured may realize a profit from obtaining
hospital, medical or surgical insurance coverage is prohibited.
(23) An advertisement that uses words such as
“extra,” “special” or “added” to describe a benefit in the policy is
prohibited. No advertisement of a benefit for which payment is conditioned upon
confinement in a hospital or similar facility shall use words or phrases such
as “tax-free,” “extra cash,” “extra income,” “extra pay,” or substantially
similar words or phrases because these words and phrases have the capacity,
tendency or effect of misleading the public into believing that the policy
advertised will, in some way, enable them to make a profit from being
hospitalized.
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of Accident and Sickness Insurance Model Regulation
Drafting
Note: Although the regulation prohibits
the use of the phrase “tax free,” it does not prohibit the use of complete and
accurate terminology explaining the Internal Revenue Service (IRS) regulations
applicable to the taxation of accident and sickness benefits. The IRS
regulations provide that the premiums paid for and the benefits received from
hospital indemnity policies are subject to the same regulations as loss of time
premiums and benefits and are not afforded the same favorable tax treatment as
premiums for expense incurred hospital, medical and surgical benefit coverages.
(Rev. Rul. 68-451 and Rev. Rul. 69-154.) Prominence either by caption, lead-in,
boldface or large type shall not be given in any manner to statements relating
to the tax status of the benefits.
Paragraphs 21 to 23 reflect the prohibition of
advertising language that creates the impression of a profit or gain to be
realized by the insured when enrolling in certain kinds of coverage. For
example, a hospital indemnity advertisement shall not include language such as
“pay for a trip to
(24) An advertisement of a hospital or other
similar facility confinement benefit shall not advertise that the amount of the
benefit is payable on a monthly or weekly basis when, in fact, the amount of
the benefit payable is based upon a daily pro rata basis relating to the number
of days of confinement unless the statements of the monthly or weekly benefit
amounts are in juxtaposition with equally prominent statements of the benefit
payable on a daily basis. The term “juxtaposition” means side by side or
immediately above or below. When the policy contains a limit on the number of
days of coverage provided, the limit shall appear in the advertisement.
(25) An advertisement of a policy covering
only one disease or a list of specified diseases shall not imply coverage
beyond the terms of the policy. Synonymous terms shall not be used to refer to
any disease so as to imply broader coverage than is the fact.
(26) An advertisement that is an invitation to
contract for a specified disease policy that provides lesser benefit amounts
for a particular subtype of disease, shall clearly disclose the subtype and its
benefits. This provision shall not apply to institutional advertisements.
(27) An advertisement of a specified disease
policy providing expense benefits shall not use the term “actual” when the
policy only pays up to a limited amount for expenses. Instead, the term
“charges” or substantially similar language should be used that does not create
the misleading impression that there is full coverage for expenses.
(28) An advertisement that describes any
benefits that vary by age shall disclose that fact.
(29) An advertisement that uses a phrase such
as “no age limit,” if benefits or premiums vary by age or if age is an underwriting
factor, shall disclose that fact.
Drafting Note:
This section recognizes that certain words and phrases in advertising may have
a tendency to mislead the public as to the extent of benefits under an
advertised policy. Consequently, the terms (and those specified in the
regulation do not represent a comprehensive list but are only examples) must be
used with caution to avoid a tendency to exaggerate benefits and must not be
used unless the statement is literally true in every instance. The use of the
following phrases based on the terms or having the same effect must be
similarly restricted: “pays hospital, surgical, etc., bills,” “pays dollars to
offset the cost of medical care,” “safeguards your standard of living,” “pays
full coverage,” “pays complete coverage,” “pays for financial needs,” “provides
for replacement of your lost paycheck,” “replaces income” or “emergency
paycheck.” Other phrases may or may not be acceptable depending upon the nature
of the coverage being advertised. For example, the phrase “this policy will
help to replace your income” is acceptable in advertising for loss-of-time
coverage but is prohibited in advertising
Model Regulation
Service—October 2003
for hospital confinement (including “hospital
indemnity”) coverage. In any advertisement the phrase “no lifetime maximum” may
not be repeated under each policy benefit or otherwise overemphasized. However,
this does not preclude the use of the general statement in an advertisement
that describes the manner in which any lifetime maximum is applied under the
coverage.
(30) A television, radio, mail or newspaper
advertisement or lead-generating device that is designed to produce leads
either by use of a coupon, a request to write or to call the company or a
subsequent advertisement prior to contact shall include information disclosing
that an agent may contact the applicant.
(31) Advertisements, applications, requests
for additional information and similar materials are prohibited if they state
or imply that the recipient has been individually selected to be offered
insurance or has had his or her eligibility for the insurance individually
determined in advance when the advertisement is directed to all persons in a
group or to all persons whose names appear on a mailing list.
(32) An advertisement, including invitations
to inquire or invitations to contract, shall not employ devices that are
designed to create undue fear or anxiety in the minds of those to whom they are
directed. Examples of prohibited devices are:
(a) The use of phrases such as “cancer kills
somebody every two minutes” and “total number of accidents” without reference
to the total population from which the statistics are drawn;
Drafting
Note: As an example of a permissible
device, data prepared by the American Cancer Society are acceptable provided
their source is noted and they are not overemphasized.
(b) The exaggeration of the importance of
diseases rarely or seldom found in the class of persons to whom the policy is
offered;
(c) The use of phrases such as “the finest
kind of treatment,” implying that the treatment would be unavailable without
insurance;
(d) The reproduction of newspaper articles,
magazine articles, information from the Internet or other similar published
material containing irrelevant facts and figures;
(e) The use of images that unduly emphasize
automobile accidents, disabled persons or persons confined in beds who are in
obvious distress, persons receiving hospital or medical bills or persons being
evicted from their homes due to their medical bills;
(f) The use of phrases such as “financial
disaster,” “financial distress,” “financial shock,” or another phrase implying
that financial ruin is likely without insurance is only permissible in an
advertisement for major medical expense coverage, individual basic medical
expense coverage or disability income coverage, and only if the phrase does not
dominate the advertisement;
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of Accident and Sickness Insurance Model Regulation
(g) The
use of phrases or devices that unduly excite fear of dependence upon relatives
or charity; and
(h) The
use of phrases or devices that imply that long sicknesses or hospital stays are
common among the elderly.
Drafting
Note: This regulation prohibits words or
phrases that exaggerate the effect of benefit payments on the insured’s general
well-being, such as “worry-free savings plan,” “guaranteed savings,” “financial
peace of mind,” and “you will never have to worry about hospital bills again.”
(2) An advertisement that is an invitation
to contract shall disclose those exceptions, reductions and limitations
affecting the basic provisions of the policy.
(3) When a policy contains a waiting,
elimination, probationary or similar time period between the effective date of
the policy and the effective date of coverage under the policy or at a time
period between the date a loss occurs and the date benefits begin to accrue for
the loss, an advertisement that is subject to the requirements of the preceding
paragraph shall prominently disclose the existence of the periods.
Drafting
Note: This paragraph imposes the same
disclosure standards as Paragraph (1) with respect to policy provisions
providing for waiting, elimination, probationary or similar time periods
between the effective date of the policy and the effective date of coverage
under the policy or at a time period between the date a loss occurs and the
date benefits begin to accrue for the loss. Where a policy has waiting,
elimination, probationary or other limiting time periods, the provisions must
be stated in negative terms.
(4) An advertisement shall not use the words
“only,” “just,” “merely,” “minimum,” “necessary” or similar words or phrases to
describe the applicability of any exceptions, reductions, limitations or
exclusions such as: “This policy is subject to the following minimum exceptions
and reductions.”
Drafting
Note: The regulation requires a fair and
accurate description of exceptions, limitations and reductions in a manner that
does not minimize, render obscure or otherwise make them appear unimportant.
Advertisements must state exceptions, limitations and reductions in the
negative and must not understate any exception, limitation or reduction or
qualify any exception, limitation or reduction to emphasize coverage described
elsewhere (e.g., “Does not pay for [insert exception, limitation or reduction],
however, Medicare pays this” is prohibited, nor is “Does not pay for the first
four days in hospital for sickness, but pays for accident from first day."
(5) An advertisement that is an invitation
to contract that fails to disclose the amount of any deductible or the
percentage of any coinsurance factor is prohibited.
Model
Regulation Service—April 1999
(6) An advertisement for loss-of-time
coverage that is an invitation to contract that sets forth a range of amounts
of benefit levels is prohibited unless it also states that eligibility for the
benefits is based upon condition of health, income or other economic
conditions, or other underwriting standards of the insurer if that is the fact.
(7) An advertisement that refers to
“hospitalization for injury or sickness” omitting the word “covered” when the
policy excludes certain sicknesses or injuries, or that refers to “whenever you
are hospitalized,” “when you go to the hospital” or “while you are confined in
the hospital” omitting the phrase “for covered injury or sickness,” if the
policy excludes certain injuries or sickness, is prohibited. Continued
reference to “covered injury or sickness” is not necessary where this fact has
been prominently disclosed in the advertisement and where the description of
sicknesses or injuries not covered is prominently set forth.
(8) An advertisement that fails to disclose
that the definition of “hospital” does not include certain facilities that
provide institutional care such as a nursing home, convalescent home or
extended care facility, when the facilities are excluded under the definition
of hospital in the policy, is prohibited.
(9) The term “confining sickness” shall be
explained in an advertisement containing the term. The explanation might be as
follows: “Benefits are payable for total disability due to confining sickness
only so long as the insured is necessarily confined indoors.” Captions such as
“Lifetime Sickness Benefits” or “Five-Year Sickness Benefits” are incomplete if
the benefits are subject to confinement requirements. When sickness benefits
are subject to confinement requirements, captions such as “Lifetime House
Confining Sickness Benefits” or “Five-Year House Confining Sickness Benefits”
would be permissible.
Drafting
Note: The term “confining sickness” is an
abbreviated expression and requires explanation so as not to be misleading.
(10) An advertisement that fails to disclose
any waiting or elimination periods for specific benefits is prohibited.
(11) An advertisement for a policy providing
benefits for specified illnesses only, such as cancer, or for specified
accidents only, such as automobile accidents, or other policies providing
benefits that are limited in nature, shall clearly and conspicuously in
prominent type state the limited nature of the policy. The statement shall be
worded in language identical to or substantially similar to the following:
“THIS IS A LIMITED POLICY,” “THIS POLICY PROVIDES LIMITED BENEFITS,” “THIS IS A
CANCER ONLY POLICY,” or “THIS IS AN AUTOMOBILE ACCIDENT ONLY POLICY.”
Drafting
Note: An advertisement that is an
invitation to contract must recite the exceptions, reductions, and limitations
as required by this regulation and in a manner consistent with Section 4. If an
exception, reduction or limitation is important enough to use in a policy, it
is of sufficient importance that its existence in the policy should be referred
to in the advertisement regardless of whether it may also be the subject matter
of a provision of the Uniform Individual Accident and Sickness Provision Law.
Advertisements
of Accident and Sickness Insurance Model Regulation
Some advertisements disclose exceptions, reductions
and limitations as required, but the advertisement is so lengthy as to obscure
the disclosure. Where the length of an advertisement has this effect, special
emphasis must be given by changing the format to show the restrictions in a
manner that does not minimize, render obscure or otherwise make them appear
unimportant.
C. Preexisting Conditions
(1) An advertisement that is an invitation
to contract shall, in negative terms, disclose the extent to which any loss is
not covered if the cause of the loss is traceable to a condition existing prior
to the effective date of the policy. The use of the term “preexisting
condition” without an appropriate definition or description shall not be used.
Drafting
Note: This regulation requires in
negative terms a description of the effect of a preexisting condition exclusion
because this exclusion is a restriction on coverage. The use of the phrase
“preexisting condition” without an appropriate definition or description of the
term is prohibited, as well as stating a reduction in the statutory time limit
(such as a reduction from three years to two years or to one year) as an
affirmative benefit. The words “appropriate definition or description” mean
that the term “preexisting condition” must be defined as the company’s claims
department uses it.
Negative features must be accurately set forth.
Any limitation on benefits including preexisting conditions also must be
restated under a caption concerning exclusions or limitations, notwithstanding
that the preexisting condition exclusion has been disclosed elsewhere in the
advertisement.
(2) When an accident and sickness insurance
policy does not cover losses resulting from preexisting conditions, an
advertisement of the policy shall not state or imply that the applicant’s
physical condition or medical history will not affect the issuance of the
policy or payment of a claimunder the policy. This regulation prohibits the use
of the phrase “no medical examination required” and phrases of similar import,
but does not prohibit explaining “automatic issue.” If an insurer requires a
medical examination for a specified policy, the advertisement if it is an
invitation to contract shall disclose that a medical examination is required.
Drafting
Note: The phrase “no health questions” or words of similar import
shall not be used if the policy excludes preexisting conditions. Use of a
phrase such as “guaranteed issue” or “automatic issue,” if the policy excludes
preexisting conditions for a certain period, must be accompanied by a statement
disclosing that fact in a manner that does not minimize, render obscure, or
otherwise make it appear unimportant and is otherwise consistent with Section
4.
(3) When an advertisement contains an
application form to be completed by the applicant and returned by mail, the
application form shall contain a question or statement that reflects the
preexisting condition provisions of the policy immediately preceding the blank
space for the applicant’s signature. For example, the application form shall contain
a question or statement substantially as follows:
“Do you understand that this
policy will not pay benefits during the first [insert number] [years, months]
after the issue date for a disease or physical condition that you now have or
have had in the past? YES”
Or substantially the following
statement:
“I understand that the policy
applied for will not pay benefits for any loss incurred during the first
[insert number] [years, months] after the issue date on account of disease or
physical condition that I now have or have had in the past.”
Model
Regulation Service—April 1999
Drafting
Note: Some states require approval of the
application even when the application is not attached to the policy when
issued. This regulation does not change the requirement. The text of this
regulation should be modified to reflect the applicable regulation in the
state.
Section
7. Necessity for Disclosing Policy
Provisions Relating to Renewability, Cancellability and Termination
A. An advertisement that is an invitation
to contract shall disclose the provisions relating to renewability,
cancellability and termination and any modification of benefits, losses
covered, or premiums because of age or for other reasons, in a manner that
shall not minimize or render obscure the qualifying conditions.
B. Advertisements
of cancellable accident and sickness insurance policies shall state that the
contract is cancellable or renewable at the option of the company, as the case
may be, in language substantially similar to the following: A policy that is
renewable at the option of the insurance company shall be advertised in a
manner similar to, “This policy is renewable at the option of the company,” or
“The company has the right to refuse renewal of this policy,” or “Renewable at
the option of the insurer,” or “This policy can be cancelled by the company at
any time.”
C. Advertisements
of insurance policies that are guaranteed renewable, cancelable or renewable at
the option of the company shall disclose that the insurer has the right to
increase premium rates if the policy so provides.
D. Qualifying conditions that constitute
limitations on the permanent nature of the coverage shall be disclosed in
advertisements of insurance policies that are guaranteed renewable, cancelable
or renewable at the option of the company. Examples of qualifying conditions
are (1) age limits, (2) reservation of a right to increase premiums, and (3)
the establishment of aggregate limits.
(1) Provisions for reduction of benefits at
stated ages shall be set forth. For example, a policy may contain a provision
that reduces benefits fifty percent (50%) after age sixty (60) although it is
renewable to age sixty-five (65). Such a reduction shall be set forth. Also, a
provision for the elimination of certain hazards at any specific ages or after
the policy has been in force for a specified time shall be set forth.
(2) An advertisement for a policy that
provides for step-rated premium rates based upon the policy year or the
insured’s attained age shall disclose the rate increases and the times or ages
at which the premiums increase.
Drafting
Note:
This regulation imposes the same disclosure standards with respect to
policy provisions relating to renewability, cancellability and termination,
modification of benefits, losses or premiums because of age or otherwise as
stated in Section 6. This regulation requires that the qualifying conditions of
renewability must be disclosed in a manner that does not minimize or render
obscure the qualifying conditions of renewal. For example, “non-cancellable and
guaranteed renewable” does not fulfill the requirement of the regulation if the
policy contains a terminal age of sixty-five. In such a case, a proper
statement would be “non-cancellable and guaranteed renewable to age sixty-five.”
If a guaranteed renewable policy reserves the right to increase premiums, the
statement must be expanded into language similar to “guaranteed renewable to
age sixty-five but the company reserves the right to increase premium rates on
a class basis.” If the contract contains an aggregate limit after which no
further benefits are payable, the above statement must be amplified with the
phrase “subject to a maximum aggregate amount of $50,000” or similar language.
A policy may have one or more of the three basic limitations and an
advertisement must describe each of those that the policy contains. Over fifty
percent of new individual policy issues are guaranteed renewable; therefore,
the fact that a policy is guaranteed renewable shall not be exaggerated.
Advertisements
of Accident and Sickness Insurance Model Regulation
With respect to noncancellable policies and
guaranteed renewable policies, the regulation requires that a summary of the
policy provisions with respect to renewability be set forth and defined where
appropriate. The disclosure of provisions relating to renewability requires the
use of language such as “noncancellable,” “noncancellable and guaranteed
renewable,” or “guaranteed renewable.” Unless otherwise modified by law or
regulation in an individual state, the use of those terms and the definitions
provided shall be consistent with the definitions of those terms adopted by the
National Association of Insurance Commissioners (See 1960 Proceedings of the NAIC I 153).
Section
8. Standards for Marketing
A.
An insurer, directly or through
its agents or brokers, shall:
(1) Establish marketing procedures to assure
that any comparison of policies by its agents or brokers will be fair and
accurate;
(2) Establish marketing procedures assuring
excessive insurance is not sold or issued, except this requirement does not
apply to group major medical expense coverage and disability income coverage;
and
(3) Establish auditable procedures for
verifying compliance with this subsection.
B. In addition to the practices prohibited
in [insert reference to state law equivalent to the NAIC Unfair Trade Practices
Act], the following acts and practices are prohibited:
(1) Twisting. Knowingly making any
misleading representation or incomplete or fraudulent comparison of insurance
policies or insurers for the purpose of inducing, or tending to induce, a
person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow
on, or convert an insurance policy, or to take out a policy of insurance with
another insurer;
(2) High Pressure Tactics. Employing a method
of marketing that has the effect of inducing the purchase of insurance, or
tends to induce the purchase of insurance through force, fright, threat,
whether explicit or implied, or undue pressure to purchase or recommend the
purchase of insurance; and
(3) Cold Lead Advertising. Making use
directly or indirectly of any method of marketing that fails to disclose in a
conspicuous manner that a purpose of the method of marketing is solicitation of
insurance and that contact will be made by an insurance agent or insurance
company.
Section 9. Testimonials or Endorsements by Third
Parties
A. Testimonials and endorsements used in
advertisements shall be genuine, represent the current opinion of the author,
be applicable to the policy advertised and be accurately reproduced. The
insurer, in using a testimonial or endorsement, makes as its own all of the
statements contained in it, and the advertisement, including the statement, is
subject to all the provisions of this regulation. When a testimonial or
endorsement is used more than one year after it was originally given, a
confirmation must be obtained.
Drafting
Note: The regulation must be applied in
conjunction with Section 10 and requires that all the statements must be
genuine and not fictitious. Under the regulation, the manufacturing,
substantive editing or “doctoring” of a testimonial is clearly prohibited as
being false and misleading to the insurance-buying public. However, language
that would be prohibited under this regulation must be edited out of a
testimonial.
Model
Regulation Service—April 1999
B. A person shall be deemed a
“spokesperson” if the person making the testimonial or endorsement:
(1) Has a financial interest in the insurer
or a related entity as a stockholder, director, officer, employee or otherwise;
(2) Has been formed by the insurer, is owned
or controlled by the insurer, its employees, or the person or persons who own
or control the insurer;
(3) Has any person in a policy-making
position who is affiliated with the insurer in any of the above described
capacities; or
(4) Is in any way directly or indirectly
compensated for making a testimonial or endorsement.
Drafting
Note: Reimbursement for substantial travel
and entertainment expenses is also required to be disclosed; however, union
scale wages required by union regulations are not required to be disclosed.
Travel away from the home of the person giving the testimonial or endorsement
to a distant location involving transportation expenses, lodging expenses or
expenses for meals constitutes payment and must be reflected as a paid
endorsement.
C. The fact of a financial interest or the
proprietary or representative capacity of a spokesperson shall be disclosed in
an advertisement and shall be accomplished in the introductory portion of the
testimonial or endorsement in the same form and with equal prominence. If a
spokesperson is directly or indirectly compensated for making a testimonial or
endorsement, the fact shall be disclosed in the advertisement by language
substantially as follows: “Paid Endorsement.” The requirement of this
disclosure may be fulfilled by use of the phrase “Paid Endorsement” or words of
similar import in a type style and size at least equal to that used for the
spokesperson’s name or the body of the testimonial or endorsement, whichever is
larger. In the case of television or radio advertising, the required disclosure
shall be accomplished in the introductory portion of the advertisement and shall
be given prominence.
Drafting
Note: This regulation requires both that
approval or endorsement of a policy by an individual, group of individuals,
society, association, or other organization be factual and that any proprietary
relationship between the sponsoring or endorsing organization and the insurer
be disclosed. For example, if the dividend under an association group case is
payable to the association, disclosure of that fact is required. Also, if the
insurer or an officer of the insurer formed or controls the association, that
fact must be disclosed.
D. The disclosure requirements of this
regulation shall not apply where the sole financial interest or compensation of
a spokesperson, for all testimonials or endorsements made on behalf of the
insurer, consists of the payment of union scale wages required by union rules,
and if the payment is actually the scale for TV or radio performances.
E. An advertisement shall not state or
imply that an insurer or an accident and sickness insurance policy has been
approved or endorsed by any individual, group of individuals, society,
association or other organizations, unless that is the fact, and unless any
proprietary relationship between an organization and the insurer is disclosed.
If the entity making the endorsement or testimonial has been formed by the
insurer or is owned or controlled by the insurer or the person or persons who
own or control the insurer, the fact shall be disclosed in the advertisement.
If the insurer or an officer of the insurer formed or controls the association,
or holds any policy-making position in the association, that fact must be
disclosed.
Advertisements
of Accident and Sickness Insurance Model Regulation
F. When a testimonial refers to benefits
received under an accident and sickness insurance policy, the specific claim
data, including claim number, date of loss and other pertinent information
shall be retained by the insurer for inspection for a period of four (4) years
or until the filing of the next regular report of examination of the insurer,
whichever is the longer period of time. The use of testimonials that do not
correctly reflect the present practices of the insurer or that are not
applicable to the policy or benefit being advertised is not permissible.
Section 10. Use of Statistics
A. An advertisement relating to the dollar
amounts of claims paid, the number of persons insured, or similar statistical
information relating to an insurer or policy shall not use irrelevant facts,
and shall not be used unless it accurately reflects all of the current and
relevant facts. The advertisement shall not imply that the statistics are
derived from the policy advertised unless that is the fact, and when applicable
to other policies or plans shall specifically so state.
(1) An advertisement shall specifically
identify the accident and sickness insurance policy to which statistics relate
and where statistics are given that are applicable to a different policy, it
shall be stated clearly that the data do not relate to the policy being advertised.
(2) An advertisement using statistics that
describe an insurer, such as assets, corporate structure, financial standing,
age, product lines or relative position in the insurance business, may be
irrelevant and, if used at all, shall be used with extreme caution because of
the potential for misleading the public. As a specific example, an
advertisement for accident and sickness insurance that refers to the amount of
life insurance which the company has in force or the amounts paid out in life insurance
benefits is not permissible unless the advertisement clearly indicates the
amount paid out for each line of insurance.
Drafting
Note: This regulation prohibits the use of
statistics in a manner that is misleading and deceptive. This regulation requires
the disclosure of all relevant facts and prohibits the use of irrelevant facts.
Irrelevant facts include statistics that are out-of-date and no longer current.
An advertisement that states the dollar amount of claims paid must also
indicate the period over which the claims have been paid. If the term “loss
ratio” is used, it shall be properly explained in the context of the
advertisement and, unless the state has issued a regulation otherwise defining
the term, it shall be calculated on the basis of premiums earned to losses
incurred and shall not be on a yearly run-off basis.
B. An advertisement shall not represent or
imply that claim settlements by the insurer are “liberal” or “generous,” or use
words of similar import, or that claim settlements are or will be beyond the
actual terms of the contract. An unusual amount paid for a unique claim for the
policy advertised is misleading and shall not be used.
C. The source of any statistics used in an
advertisement shall be identified in the advertisement.
Drafting
Note: The regulation does not require that
state-only statistics be used since statistics such as hospital charges and
average stays may vary from state to state. When nationwide statistics are used
the fact should be noted, unless the statistics on the particular point are
substantially the same in a state to which the advertisement is directed.
Statistics may be used only if they are credible. Statistics that are
applicable to a broader array of illnesses or accidents than those covered under
the policy cannot be used.
Model
Regulation Service—April 1999
A. An advertisement that uses the word
“plan” without prominently identifying it as an accident and sickness insurance
policy is prohibited.
B. When a choice of the amount of benefits
is referred to, an advertisement that is an invitation to contract shall
disclose that the amount of benefits provided depends upon the plan selected
and that the premium will vary with the amount of the benefits selected.
C. When an advertisement that is an
invitation to contract refers to various benefits that may be contained in two
(2) or more policies, other than group master policies, the advertisement shall
disclose that the benefits are provided only though a combination of policies.
Section 12. Disparaging Comparisons and Statements
An
advertisement shall not directly or indirectly make unfair or incomplete
comparisons of policies or benefits or comparisons of non-comparable policies
of other insurers, and shall not disparage competitors, their policies,
services or business methods, and shall not disparage or unfairly minimize
competing methods of marketing insurance.
A. An advertisement shall not contain
statements such as “no red tape” or “here is all you do to receive benefits.”
B. Advertisements that state or imply that
competing insurance coverages customarily contain certain exceptions,
reductions or limitations not contained in the advertised policies are
prohibited unless the exceptions, reductions or limitations are contained in a
substantial majority of the competing coverages.
C. Advertisements that state or imply that
an insurer’s premiums are lower or that its loss ratios are higher because its
organizational structure differs from that of competing insurers are
prohibited.
Drafting
Note: The regulation prohibits
disparaging, unfair or incomplete comparisons of policies or benefits that
would have a tendency to deceive or mislead the public. The regulation does not
preclude the use of comparisons by health maintenance organizations, prepaid
health plans and other direct service organizations that describe the
difference between their prepaid health benefits coverage and indemnity
insurance coverage.
A. An advertisement that is intended to be
seen or heard beyond the limits of the jurisdiction in which the insurer is
licensed shall not imply licensing beyond those limits.
Drafting
Note: This regulation prohibits
advertisements that imply that an insurer is licensed beyond the limits of
those jurisdictions where it is actually licensed. An advertisement that
contains testimonials from persons who reside in a state in which the insurer
is not licensed or that refers to claims of persons residing in states in which
the insurer is not licensed implies licensing in those states and therefore is
in violation of this regulation unless the advertisement states that the
insurer is not licensed in those states.
Advertisements
of Accident and Sickness Insurance Model Regulation
B. An advertisement shall not create the
impression directly or indirectly that the insurer, its financial condition or
status, or the payment of its claims, or the merits, desirability, or
advisability of its policy forms or kinds or plans of insurance are approved,
endorsed or accredited by any division or agency of this state or the federal
government. Terms such as “official” or words of similar import, used to
describe any policy or application form are prohibited because of the potential
for deceiving or misleading the public.
Drafting
Note: Although the regulation permits a
reference to an insurer being licensed in a state where the advertisement
appears, it does not allow exaggeration of the fact of the licensing nor does
it permit the suggestion that competing insurers may not be so licensed
because, in most states, an insurer must be licensed in the state to which it
directs its advertising.
C. An advertisement shall not imply that
approval, endorsement or accreditation of policy forms or advertising has been
granted by any division or agency of the state or federal government. Approval
of either policy forms or advertising shall not be used by an insurer to imply
or state that a governmental agency has endorsed or recommended the insurer,
its policies, advertising or its financial condition.
Section 14. Identity of Insurer
A.
The
name of the actual insurer shall be stated in all of its advertisements. The
form number or numbers of the policy advertised shall be stated in an
advertisement that is an invitation to contract. An advertisement shall not use
a trade name, an insurance group designation, name of the parent company of the
insurer, name of a particular division of the insurer, service mark, slogan,
symbol or other device that without disclosing the name of the actual insurer,
would have the capacity and tendency to mislead or deceive as to the true
identity of the insurer.
Drafting
Note: The regulation recognizes the
existence of holding companies. The requirement that the advertisement refer to
the policy form number is applicable only to advertisements of individual and
franchise policies that are invitations to contract.
B. An advertisement shall not use any
combination of words, symbols, or physical materials that by their content,
phraseology, shape, color or other characteristics are so similar to
combination of words, symbols or physical materials used by agencies of the
federal government or of this state, or otherwise appear to be of such a nature
that it tends to confuse or mislead prospective insureds into believing that
the solicitation is in some manner connected with an agency of the municipal,
state or federal government.
C. Advertisements, envelopes or stationery
that employ words, letters, initials, symbols or other devices that are similar
to those used in governmental agencies or by other insurers are not permitted
if they may lead the public to believe:
(1) That the advertised coverages are
somehow provided by or are endorsed by the governmental agencies or the other
insurers;
(2) That the advertiser is the same as is
connected with or is endorsed by the governmental agencies or the other
insurers.
D. An advertisement shall not use the name
of a state or political subdivision of a state in a policy name or description.
Model
Regulation Service—April 1999
E. An advertisement in the form of
envelopes or stationery of any kind may not use any name, service mark, slogan,
symbol or any device in a manner that implies that the insurer or the policy
advertised, or that any agent who may call upon the consumer in response to the
advertisement, is connected with a governmental agency, such as the Social
Security Administration.
F. An advertisement may not incorporate
the word “Medicare” in the title of the plan or policy being advertised unless,
wherever it appears, the word is qualified by language differentiating it from
Medicare. The advertisement, however, shall not use the phrase “[ ] Medicare Department of the [ ] Insurance Company,” or language of
similar import.
G. An advertisement may not imply that the
reader may lose a right or privilege or benefit under federal, state or local
law if he or she fails to respond to the advertisement.
H. The use of letters, initials or symbols
of the corporate name or trademark that would have the tendency or capacity to
mislead or deceive the public as to the true identity of the insurer is
prohibited unless the true, correct and complete name of the insurer is in
close conjunction and in the same size type as the letters, initials or symbols
of the corporate name or trademark.
I. The use of the name of an agency or
“[ ] Underwriters” or “[ ] Plan” in type, size and location so
as to have the capacity and tendency to mislead or deceive as to the true
identity of the insurer is prohibited.
J. The use of an address so as to mislead
or deceive as to true identity of the insurer, its location or licensing status
is prohibited.
K. An insurer shall not use, in the trade
name of its insurance policy, any terminology or words so similar to the name
of a governmental agency or governmental program as to have the tendency to
confuse, deceive or mislead the prospective purchaser.
L. Advertisements used by agents,
producers, brokers or solicitors of an insurer shall have prior written
approval of the insurer before they may be used.
M. An agent who makes contact with a
consumer, as a result of acquiring that consumer’s name from a lead-generating
device, shall disclose that fact in the initial contact with the consumer. An
agent or insurer may not use names produced from lead-generating devices that
do not comply with the requirements of this regulation.
Section 15. Group or Quasi-Group Implications
A. An advertisement of a particular policy
shall not state or imply that prospective insureds become group or quasi-group
members covered under a group policy and as members, enjoy special rates or
underwriting privileges, unless that is the fact.
B. This regulation prohibits the
solicitations of a particular class, such as governmental employees, by use of
advertisements which state or imply that their occupational status entitles
them to reduced rates on a group or other basis when, in fact, the policy being
advertised is sold only on an individual basis at regular rates.
Advertisements
of Accident and Sickness Insurance Model Regulation
C. Advertisements that indicate that a
particular coverage or policy is exclusively for “preferred risks” or a
particular segment of the population or that a particular segment of the
population is an acceptable risk, when the distinctions are not maintained in
the issuance of policies, are prohibited.
D. An advertisement to join an
association, trust or discretionary group that is also an invitation to
contract for insurance coverage shall clearly disclose that the applicant will
be purchasing both membership in the association, trust or discretionary group
and insurance coverage. The insurer shall solicit insurance coverage on a
separate and distinct application that requires a separate signature. The
separate and distinct applications required need not be on separate documents
or contained in a separate mailing. The insurance program shall be presented so
as not to conceal the fact that the prospective members are purchasing
insurance as well as applying for membership, if that is the case. Similarly,
it is prohibited to use terms such as “enroll” or “join” to imply group or
blanket insurance coverage when that is not the fact.
E.
Advertisements
for group or franchise group plans that provide a common benefit or a common
combination of benefits shall not imply that the insurance coverage is tailored
or designed specifically for that group, unless that is the fact.
Drafting Note: The
regulation prohibits the use of representations to any segment of the
population that a particular policy or coverage is available only to that or
similar segments of the population as preferred risks when actually the policy
or coverage is available to members of the public at large at the same rates.
For example, the regulation prohibits an advertisement labeled “Now for Readers
of X Magazine.”
A. (1) An
advertisement of an individual policy shall not directly or by implication
represent that a contract or combination of contracts is an introductory,
initial or special offer, or that applicants will receive substantial
advantages not available at a later date, or that the offer is available only
to a specified group of individuals, unless that is the fact. An advertisement
shall not contain phrases describing an enrollment period as “special,”
“limited,” or similar words or phrases when the insurer uses the enrollment
periods as the usual method of marketing accident and sickness insurance.
(2) An enrollment period during which a
particular insurance product may be purchased on an individual basis shall not
be offered within this state unless there has been a lapse of not less than
[insert number] months between the close of the immediately preceding
enrollment period for the same product and the opening of the new enrollment
period. The advertisement shall indicate the date by which the applicant must
mail the application, which shall be not less than ten (10) days and not more
than forty (40) days from the date that the enrollment period is advertised for
the first time. This regulation applies to all advertising media, i.e., mail,
newspapers, the Internet, radio, television, magazines and periodicals, by any
one insurer. It is inapplicable to solicitations of employees or members of a
particular group or association that otherwise would be eligible under specific
provisions of the Insurance Code for group, blanket or franchise insurance. The
phrase “any one insurer” includes all the affiliated companies of a group of
insurance companies under common management or control.
Model
Regulation Service—April 1999
Drafting
Note: The regulation restricts the
repetitive use of enrollment periods. The requirement of reasonable closing
dates and waiting periods between enrollment periods was adopted to eliminate
abuses that formerly existed. The regulation does not limit just the use of
enrollment periods. It requires that a particular insurance product offered in
an enrollment period through any advertising media, including the prepared
presentations of agents, cannot be offered again in the entire state until a
specified number of months from the close of the enrollment period have
expired. Thus, an insurer must choose whether to use enrollment periods or open
enrollment for a product. (See Paragraph (4) for a definition of “a particular
insurance product.”). The regulation does not prohibit multiple advertising
during an enrollment period through any and all media published or transmitted
within this state as long as the enrollment periods for all the advertisements
have the same expiration date.
The regulation does not prohibit the solicitation
of members of a group or association for the same product even though there has
not been a lapse of a specified number of months since the close of a preceding
enrollment period that was open to the general public for the same product. The
regulation does not require separation by a specified number of months of
enrollment periods for the same insurance product in this state if the
advertising material is directed by an admitted insurer to persons by direct
solicitation on the basis that a common relationship exists with an entity,
such as a bank and its depositors, a department store to its charge account
customers or an oil company to its credit card holders, and more than one of
the organizations is sponsoring the insurance product at different times if
providing the insurance under this method is not otherwise prohibited by law.
However, the [insert number] month regulation does apply to one specific
sponsor to the same person in this state on the basis of his or her status as a
customer of that one specific entity only.
The number of months was left open in this
regulation because several states permit six months; several states allow three
months, and other states prohibit certain periods of enrollment. Whether the
enrollment periods should be permissible and the period of time between
enrollments are items on which each state should make its decision on an
individual basis and each state should modify the time limit in this regulation
to comply with state law.
(3) This regulation prohibits any statement
or implication to the effect that only a specific number of policies will be
sold, or that a time is fixed for the discontinuance of the sale of the
particular policy advertised because of special advantages available in the
policy, unless that is the fact.
(4) The phrase “a particular insurance
product” in Paragraph (2) of this subsection means an insurance policy that
provides substantially different benefits than those contained in any other
policy. Different terms of renewability; an increase or decrease in the dollar
amounts of benefits; an increase or decrease in any elimination period or
waiting period from those available during an enrollment period for another
policy shall not be sufficient to constitute the product being offered as a
different product eligible for concurrent or overlapping enrollment periods.
Drafting
Note: This regulation defines the meaning
of “a particular insurance product" and prohibits advertising of products
having minor variations, such as different elimination periods or different
amounts of daily hospital indemnity benefits, in a succession of enrollment
periods.
B. An advertisement shall not offer a
policy that utilizes a reduced initial premium rate in a manner that
overemphasizes the availability and the amount of the initial reduced premium.
When an insurer charges an initial premium that differs in amount from the
amount of the renewal premium payable on the same mode, the advertisement shall
not display the amount of the reduced initial premium either more frequently or
more prominently than the renewal premium, and both the initial reduced premium
and the renewal premium must be stated in juxtaposition in each portion of the
advertisement where the initial reduced premium appears.
Drafting
Note: Some states prohibit a reduced
initial premium. Section 16B does not imply that the states that prohibit an
initial premium are not in conformity with the model regulation. This is an
item to be decided on a state-by-state basis.
C. Special awards, such as a “safe
drivers’ award,” shall not be used in connection with advertisements of
accident and sickness insurance.
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Section 17. Statements about an Insurer
An
advertisement shall not contain statements that are untrue in fact, or by
implication misleading, with respect to the assets, corporate structure,
financial standing, age or relative position of the insurer in the insurance
business. An advertisement shall not contain a recommendation by any commercial
rating system unless it clearly indicates the purpose of the recommendation and
the limitations of the scope and extent of the recommendations.
Drafting
Note: This is closely related to the
requirements of Section 10 concerning the use of statistics. The regulation
prohibits insurers that have been organized for only a brief period of time
advertising that they are “old” and also prohibits the use of images of a “home
office” building in a manner that is misleading with respect to the actual size
and magnitude of the insurer. Also, the occupations of the persons comprising
the insurer’s board of directors or the public’s familiarity with their names
or reputations are irrelevant and must not be emphasized. The preponderance of
a particular occupation or profession among the board of directors of an
insurer does not justify the advertisement of a plan of insurance offered to
the general public as insurance designed or recommended by members of that
occupation or profession. For example, it is prohibited for an insurance
company to advertise a policy offered to the general public as “the physician’s
policy” or “the doctor’s plan” simply because there is a preponderance of
physicians on the board of directors of the insurer. The regulation prohibits
the use of a recommendation of a commercial rating system unless the purpose,
meaning and limitations of the recommendation are clearly indicated.
Section 18. Enforcement Procedures
A. Advertising File. Each insurer shall
maintain at its home or principal office a complete file containing every
printed, published or prepared advertisement of its individual policies and
typical printed, published or prepared advertisements of its blanket, franchise
and group policies hereafter disseminated in this or any other state, whether
or not licensed in an other state, with a notation attached to each
advertisement that indicates the manner and extent of distribution and the form
number of any policy advertised. The file shall be subject to regular and
periodical inspection by the commissioner. All of these advertisements shall be
maintained in a file for a period of either four (4) years or until the filing
of the next regular report on examination of the insurer, whichever is the
longer period of time.
B. Certificate of Compliance. Each insurer
required to file an annual statement shall file with the commissioner, with its
annual statement, a certificate of compliance executed by an authorized officer
of the insurer that states that, to the best of the officer’s knowledge,
information and belief, the advertisements that were disseminated by the
insurer during the preceding statement year complied or were made to comply in
all respects with the provisions of this regulation and the insurance laws of
this state as implemented and interpreted by this regulation.
Drafting
Note: Where the regulation was adopted on
other than January 1 of the year, the required certification that all
advertisements used in the preceding annual statement year complied with the
regulation cannot be given. The respective insurance departments should
consider remedying the problem in the Certificate of Compliance used for the
calendar year in which the regulation was adopted.
Section 19. Severability Provision
If
any section or portion of a section of this regulation, or its applicability to
any person or circumstance is held invalid by a court, the remainder of the
regulation, or the applicability of the provision to other persons or
circumstances, shall not be affected.
Model
Regulation Service—April 2002
Section 20. Filing for Prior Review
The
commissioner may, at his or her discretion, require filing of any accident and
sickness insurance advertising material for review prior to use.. The
advertising material shall be filed by the insurer with the commissioner not
less than thirty (30) days prior to the date the insurer desires to use the
advertisement.
Drafting
Note: This is an example of a regulation
that may be used at the option of the commissioner in a state that elects to
review advertisements prior to use. The NAIC takes no position on the question
of whether advertising material should be subject to prior review by the
commissioner.
_______________________________
Legislative
History (all references are to the Proceedings of the NAIC)
1956 Proc.
I 127, 130, 131-137, 148 (adopted)
1956 Proc.
II 270, 301, 315 (interpretive guidelines established).
1957 Proc.
I 76, 89-90, 99 (amended).
1972 Proc.
I 15, 16, 555, 557, 563-580 (amended and reprinted).
1973 Proc.
I 9, 11, 141, 224, 244-250 (amended and reprinted).
1974 Proc.
II 8, 10, 380, 419, 420-441 (amended and reprinted).
1989 Proc.
I 24-25, 702, 706-726 (amended and reprinted).
1998 Proc.
4th Quarter 16, 17, 652, 654, 688-712 (amended and reprinted).
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