Current through Register Vol. 50, No. 9, March 1, 2024
RELATES TO:
KRS
304.3-200,
304.3-240,
304.12-010,
304.12-020,
304.12-060,
304.12-120,
304.12-130,
304.99
NECESSITY, FUNCTION, AND CONFORMITY:
KRS
304.2-110(1) authorizes the
Commissioner of Insurance to promulgate administrative regulations necessary
for or as an aid to the effectuation of any provision of the Kentucky Insurance
Code, as established in
KRS
304.1-010. This administrative regulation
clarifies the minimum standards for advertising as established in
KRS
304.12-010 and
304.12-020.
Section 1. Definitions.
(1) "Exception" means:
(a) Any provision in a policy in which
coverage for a specified hazard is eliminated; or
(b) A statement of risk not assumed under the
policy.
(2) "Limitation"
means any provision that restricts coverage under the policy other than an
exception or a reduction.
(3)
"Reduction" means:
(a) Any provision in a
policy that reduces the amount of the benefit; and
(b) A risk of loss is assumed but payment
upon the occurrence of the loss is limited to some amount or period less than
what would be otherwise payable had the reduction clauses not been
used.
Section
2. Scope. The provisions of this administrative regulation shall:
(1) Be limited to a life or health insurer
issuing any policy; and
(2) Apply
to individual and group accident and sickness insurance advertisements;
and
(3) Apply to agents and brokers
to the extent that an agent and broker are responsible for the advertisement of
any policy.
Section 3.
(1) An insurance advertisement shall include:
(a) Printed and published material and
descriptive literature of an insurer used in newspapers, magazines, radio and
TV scripts, and billboards and similar displays;
(b) Descriptive literature and sales aids of
all kinds issued by an insurer for presentation to members of the public,
including circulars, leaflets, booklets, depictions, illustrations, and form
letters; and
(c) Prepared sales
talks, presentations, material for use by agents and brokers, and
representations made by agents and brokers.
(2) A policy shall include any policy, plan,
certificate, contract, agreement, statement of coverage, rider, or endorsement
that provides accident or sickness benefits or medical, surgical, or hospital
expense benefits, whether on a cash indemnity, reimbursement, or service basis,
except if issued in connection with another kind of insurance other than life,
and except disability and double indemnity benefits included in life insurance
and annuity contracts.
(3) Insurer
shall include any corporation, association, partnership, reciprocal exchange,
interinsurer, Lloyds, fraternal benefit society, and any other legal entity
engaged in the advertisement of a policy.
Section 4.
(1) Advertisements shall:
(a) Be truthful and not misleading in fact or
in implication; and
(b) Not use
words or phrases, which are clear only by:
1.
Implication; or
2. Familiarity with
insurance terminology.
(2)
(a)
Words, phrases, or illustrations shall not be used in a manner that misleads or
has the capacity and tendency to deceive as to the extent of any policy benefit
payable, loss covered, or premium payable. An advertisement relating to any
policy benefit payable, loss covered, or premium payable shall be sufficiently
complete and clear to avoid deception or the capacity and tendency to
deceive.
(b) The words and phrases
"all," "full," "complete," "comprehensive," "up to," "as high as," "this policy
will pay your hospital and surgical bills," "this policy will replace your
income," or similar words and phrases:
1.
Shall not be used so as to exaggerate any benefit beyond the terms of the
policy; and
2. May be used only in
a manner that fairly describes a benefit.
(c) A policy covering only one (1) disease or
a list of specified diseases shall not be advertised in a manner that implies
coverage beyond the terms of the policy. Synonymous terms shall not be used to
refer to any disease as to imply broader coverage than is the fact.
(d) The benefits of a policy that pays
varying amounts for the same loss occurring under different conditions or that
pays benefits only if a loss occurs under certain conditions shall not be
advertised without disclosing the limited conditions under which the benefits
referred to are provided by the policy.
(e) Phrases similar to "this policy pays
$1,800 for hospital room and board expenses" shall be incomplete without
indicating the maximum daily benefit and the maximum time limit for hospital
room and board expenses.
(3) If an advertisement refers to any dollar
amount, period of time for which any benefit is payable, cost of policy,
specific policy benefit, or the loss for which a benefit is payable, it shall
also disclose those exceptions, reductions, and limitations affecting the basic
provisions of the policy without which the advertisement would have the
capacity and tendency to mislead or deceive. Required disclosures include:
(a) If a policy contains a time period
between the effective date of the policy and the effective date of coverage
under the policy or a time period between the date a loss occurs and the date
benefits begin to accrue for the loss, an advertisement shall disclose the
existence of the periods; and
(b)
An advertisement shall 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. If a policy does not cover losses traceable to
preexisting conditions, the 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 claim. This requirement shall
limit use of the phrase "no medical examination required" and similar
phrases.
Section
5. An advertisement that refers to renewability, cancelability, or
termination of a policy, that refers to a policy benefit, or that states or
illustrates time or age in connection with eligibility of applicants or
continuation of the policy, shall disclose the provisions relating to
renewability, cancelability, 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.
Section 6. All information required to be
disclosed by this administrative regulation shall be stated:
(1) Conspicuously and in close conjunction
with the statements to which the information relates; or
(2) Under appropriate captions of prominence
that shall not be minimized, rendered obscure, or presented in an ambiguous
fashion or intermingled with the context of the advertisement so as to be
confusing or misleading.
Section
7. Testimonials used in advertisements shall be genuine, represent
the current opinion of the author, be applicable to the policy advertising, and
be accurately reproduced. The insurer, in using a testimonial shall make as its
own all of the statements contained in the advertisement. All of the
advertisement, including the statements, shall be subject to the provisions of
this administrative regulation.
Section
8. 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 be used unless it accurately reflects all of
the relevant facts. The advertisement shall not imply that statistics are
derived from the policy advertised unless that is the fact.
Section 9. An offer in an advertisement of
free inspection of a policy or offer of a premium refund shall not be a cure
for misleading or deceptive statements contained in the
advertisement.
Section 10.
(1) If a choice of the amount of benefits is
referred to, an advertisement shall disclose that the amount of benefits
provided depends upon the plan selected, and that the premium will vary in
conjunction with the amount of the benefits.
(2) If an advertisement refers to various
benefits that could be contained in two (2) or more policies, other than group
master policies, the advertisement shall disclose that the benefits are
provided only through a combination of the policies.
Section 11. An advertisement shall not
directly or indirectly make unfair or incomplete comparisons of policies or
benefits or otherwise falsely disparage competitors, policies, services, or
business methods.
Section 12.
(1) 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.
(2) Advertisements by direct mail insurers
shall indicate that the insurer is licensed in a specified state or states
only, or is not licensed in a specified state or states, by use of language
similar to "This company is licensed only in State A" or "This company is not
licensed in State B."
Section
13. The identity of the insurer shall be made clear in all of the
insurer's advertisements. An advertisement shall not use a trade name, service
make, slogan, symbol, or other device that has the capacity and tendency to
mislead or deceive as to the true identity of the insurer.
Section 14. An advertisement of a particular
policy shall not state or imply that prospective policyholders become group or
quasi-group members and, as members, enjoy special rates or underwriting
privileges unless that is the fact.
Section
15. An advertisement shall not state or imply that a particular
policy or combination of policies is an introductory, initial, or special offer
and that the applicant shall receive advantages by accepting the offer unless
that is the fact.
Section 16.
(1) An advertisement shall not state or imply
that an insurer or a policy has been approved, or that an insurer's financial
condition has been examined and found to be satisfactory by a governmental
agency, unless that is the fact.
(2) An advertisement shall not state or imply
that an insurer or a policy has been approved or endorsed by any individual,
group of individuals, society, association, or other organization, unless that
is the fact.
Section 17.
An advertisement shall not contain:
(1) Untrue
statements with respect to the time within which claims are paid; or
(2) Statements that imply that claim
settlements will be liberal or generous beyond the terms of the
policy.
Section 18. An
advertisement shall not contain statements that are untrue in fact or by
implication misleading with respect to the insurer's assets, corporate
structure, financial standing, age, or relative position in the insurance
business.
Section 19.
(1) Each insurer shall maintain at its home
or principal office a complete file containing every printed, published, or
prepared advertisement of individual policies, and typical printed, published,
or prepared advertisements of blanket, franchise, and group policies,
disseminated in this or any other state, whether or not licensed in the other
state, with a notation attached to each advertisement that shall indicate 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
Department of Insurance. All advertisements shall be maintained by the insurer
for a period of not less than three (3) years.
(2) A life or health insurer required to file
an annual statement, in accordance with
KRS
304.3-240, that issues any policy shall file
with the department, together with its annual statement, a certificate executed
by an authorized officer of the insurer stating that to the best of his or her
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 KRS Chapter 304.
Section 20. Any person, firm,
corporation, or association who knowingly aids and abets an insurer in the
violation of this administrative regulation or the applicable provisions of the
Insurance Code shall be subject to the penalties established by KRS Subtitle
304.99.
Section 21. Incorporation
by Reference.
(1) Form 440, "Certificate on
Advertising- Accident and Health", 10/2021 edition is incorporated by
reference.
(2) This material may be
inspected, copied or obtained, subject to applicable copyright law, at the
Department of Insurance, Mayo-Underwood Building, 500 Mero Street, Frankfort,
Kentucky 40601, Monday through Friday, 8 a.m. to 4:30 p.m. This material is
also available on the department's Web site at:
https://insurance.ky.gov/ppc/CHAPTER.aspx.
STATUTORY AUTHORITY:
KRS
304.2-110(1)