California Code of Regulations
Title 10 - Investment
Chapter 5 - Insurance Commissioner
Subchapter 3 - Insurers
Article 12 - Disability Insurance Advertisements
Section 2536.5 - 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 any insurer or policy shall not use irrelevant facts and shall not be used unless it accurately reflects all of the relevant facts. Such an advertisement shall not imply that such statistics are derived from the policy advertised unless such is the fact, and when applicable to other policies or plans shall specifically so state.

GUIDELINE 2536.5(a)

This Subsection prohibits the use of statistics in a manner which is misleading and deceptive. It requires the disclosure of all relevant facts and prohibits the use of irrelevant facts. An advertisement shall specifically identify the policy to which statistics relate and, where statistics are given which are applicable to a different policy, it must be stated clearly that the data do not relate to the policy being advertised.

Statistics which describe the 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, must be used with extreme caution because of their potential for misleading the public. As a specific example, an advertisement for a health insurance policy which 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.

An advertisement which states the dollar amount of claims paid must also indicate the period over which such claims have been paid.

If the term "loss ratio" is used, it shall be properly explained in the context of the advertisement and, unless a regulation is subsequently issued 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.

GUIDELINES 2536.5(b)

This Subsection prohibits deceptive or misleading statements in an advertisement regarding an insurer's claim settlement practices. It also prohibits the use of an unusual amount paid for a unique claim or an unusual claim whether actual or hypothetical.

(c) The source of any statistics used in an advertisement shall be identified in such advertisement.

GUIDELINE 2536.5(c)

This Subsection requires any advertisement which uses statistics to cite the source. The rule does not require that statistics for this State be used since such statistics as hospital charges and average stays may vary from state to state. When nationwide statistics are used such fact should be noted as such unless the statistics on the particular point are substantially the same as those for this State. Statistics may be used only if they are credible.