Current through Register Vol. 48, No. 3, March 22, 2024
A. Purpose: The
purpose of this Regulation is to establish minimum standards of readability
applicable to all commonly purchased personal policies, contracts and
certificates of insurance delivered or issued for delivery in this State.
This Regulation is not intended to increase the risk assumed by
insurance companies or other entities subject to this Act or to supersede their
obligation to comply with the substance of other insurance legislation
applicable to such forms of insurance policies. This Regulation is not intended
to impede flexibility and innovation in the development of policy forms or
content or to lead to the standardization of policy forms or content.
A policy is a legal document. Revision of the policy to make it
more readable must not lead to its devaluation as a legal document. The policy
must comply with all statutory and regulatory requirements.
B. Definitions-As used in this Regulation:
(1) "Director" is as defined in Section
38-1-20.
(2) "Policy" or "Policy Forms" means any
policy, certificate, rider, amendment, endorsement, contract, plan or agreement
of personal insurance, and any renewal thereof including homeowners, dwelling
fire, automobile, accident and health, life and all other forms of personal
insurance delivered or issued for delivery in this State by any company subject
to this Regulation; any certificate, contract or policy issued by a fraternal
benefit society, and any certificate issued pursuant to a group insurance
policy delivered or issued for delivery in this State. The Director may add
other policies as he deems advisable.
(3) "Company" or "Insurer" means any life and
health, accident, property and casualty, title or marine insurance company,
reciprocal, county mutuals, fraternal benefit society, nonprofit health
services corporation, nonprofit hospital service corporation, nonprofit medical
service corporation, prepaid health plan, dental care plan, vision care plan,
pharmaceutical plan, health maintenance organization, and all similar type
organizations.
C.
Applicability:
This Regulation shall apply to all policies delivered or issued
for delivery in this State by any insurer on or after the date such forms must
be approved under this Regulation, but nothing in this Regulation shall apply
to:
(1) Any policy which is a security
subject to federal jurisdiction;
(2) Any group policy; however, this shall not
exempt any certificate issued pursuant to a group policy delivered or issued
for delivery in this State or mass marketed certificates subject to approval by
this Department;
(3) Any group
annuity contract which serves as a funding vehicle for pension, profit-sharing,
or deferred compensation plans;
(4)
Commercial, fleet vehicle and incidental personal coverages which are a part of
a commercial policy;
(5) Any life,
accident and health form used in connection with, as a conversion from, as an
addition to, in exchange for, or issued pursuant to a contractual provision
for, a policy delivered or issued for delivery on a form approved or permitted
to be issued prior to the date such forms must be approved under this
Regulation;
(6) Renewal of a life
or accident and health policy delivered or issued for delivery prior to the
date such forms must be approved under this Regulation;
(7) Surety or fidelity bonds.
D. Minimum Policy Readability
Standards:
(1) In addition to any other
requirements of law, no policy forms of personal insurance except as stated in
Section C, shall be delivered or issued for delivery in this State on or after
the dates such forms must be approved under this Regulation unless:
(a) The text achieves a minimum score of 40
on the Flesch Reading Ease Test or an equivalent score on any other comparable
test as provided in subsection (3) of this Section;
(b) It is printed, except for specification
pages, schedules and tables, in not less than ten point type, one point
leaded;
(c) The style, arrangement
and overall appearance of the policy give no undue prominence to any portion of
the text of the policy or to any endorsement or riders; and
(d) It contains a table of contents or an
index of the principal sections of the policy, if the policy has more than
3,000 words or if the policy is printed on more than three pages.
(2) For the purposes of this
Section, a Flesch Reading Ease Test Score shall be measured by the following
method:
(a) For a policy containing 10,000
words or less of text, the entire policy shall be analyzed. For a policy
containing more than 10,000 words, the readability of two 100-word samples per
page may be analyzed instead of the entire form. The samples shall be separated
by at least 20 printed lines.
(b)
The number of words and sentences in the text shall be counted and the total
number of words divided by the total number of sentences. The figure obtained
shall be multiplied by a factor of 1.015.
(c) The total number of syllables shall be
counted and divided by the total number of words. The figure obtained shall be
multiplied by a factor of 84.6.
(d)
The sum of the figures computed under (b) and (c) subtracted from 206.835
equals the Flesch Reading Ease Test Score for the policy form.
(e) For purposes of this Section, the
following procedures shall be used:
(1) A
contraction, hyphenated word, numbers and letters when separated by spaces
shall be counted as one word;
(2) A
unit of words ending with a period, semicolon, or colon, but excluding headings
and captions shall be counted as a sentence;
(3) A syllable means a unit of spoken
language consisting of one or more letters of a word as divided by an accepted
dictionary. Where the dictionary shows two or more equally acceptable
pronunciations of a word, the pronunciation containing fewer syllables may be
used.
(f) The term "text"
as used in this Section shall include all printed matter except the following:
(1) The name and address of the insurer; the
name, number or title of the policy; the table of contents or index; captions
and sub-captions; specification pages, schedules or tables;
(2) Any policy language which is drafted to
conform to the requirements of any federal law, regulation or agency
interpretation; any policy language required by any collectively bargained
agreement; any medical terminology; any words which are defined in the policy;
and any policy language required by law or regulation; provided, however, the
insurer identifies the language or terminology excepted by this subsection and
certifies, in writing, that the language or terminology is entitled to be
excepted by this subsection.
(3)
Any other reading test may be approved by the Director for use as an
alternative to the Flesch Reading Ease Test if it is comparable in result to
the Flesch Reading Ease Test.
(4)
Any non-English language policy delivered or issued for delivery in this State
shall be deemed to be in compliance with Section D(1) of this Regulation if the
insurer certifies that the policy is translated from an English language policy
which complies with Section D(1) of this Regulation.
(5) Filings subject to this Section shall
provide the actual score or be accompanied by a certification signed by an
officer of the insurer or filing organization stating that the policy form
meets the minimum requirements of Section D(1). Such certification shall state
that the policy form meets the minimum reading ease test score on the test used
or that the score is lower than the minimum required but should be approved in
accordance with Section E. To confirm the accuracy of any certification or
score, the Director may require the submission of further information to verify
the certification or score in question. If it is necessary to alter coverage,
such change must be noted and explained upon submission for filing.
(6) At the option of the insurer, riders,
endorsements, and other forms made a part of the policy may be scored as
separate forms or as part of the policy with which they may be
used.
E. Powers of the Director: The Director may
approve a policy which does not meet the minimum Flesch Reading Ease Test Score
required herein whenever, in his sole discretion, he finds such approval:
(1) will provide a more accurate reflection
of the readability of a policy form;
(2) is warranted by the nature of a
particular policy, or
(3) is
warranted by certain policy language which is drafted to conform to the
requirements of any State law, regulation or agency interpretation.
F. Approval of Forms: A policy
meeting the requirements of Section D(1) shall be approved, notwithstanding the
provisions of any other law which specify the content of policies, if the
policy provides the policyholders and claimants protection not less favorable
than they would be entitled to under such laws.
G. Effective Dates:
This regulation, as amended, becomes effective upon publication
in the State Register.
H.
Penalties: Any insurer who violates the provisions of this regulation shall be
subject to the penalties set forth in Section
38-2-10
of the Code of Laws of South Carolina 1976, as amended.
