Current through August, 2024
WHEREAS the insurance laws of this State and particularly
8 VSA §
4084 prohibit the transmission of information
in the form of advertisements or otherwise in such a manner or of such
substance that the insurance buying public may be deceived or misled thereby;
and
WHEREAS said insurance laws establish only general standards
by which advertisements in the field of individual, group., blanket and
franchise accident and sickness insurance should be prepared, disseminated and
regulated; and
WHEREAS it is considered proper and desirable to implement
and interpret the general statutory standards and to adopt proper procedures to
expedite enforcement thereof by this office; now therefore
IT IS ORDERED that the following standards for advertisements
of such accident and sickness insurance as well as the administrative and
enforcement procedures hereafter enumerated be and are hereby adopted as a
formal and official rule (ruling) of this Department:
Section 1 Definitions
A. An advertisement for the purpose of these
rules shall include:
(1) printed and
published material, audio visual material, and descriptive literature of an
insurer used in direct mail, newspapers, magazines, radio scripts, TV scripts,
billboards and similar displays;
(2) descriptive literature and sales aids of
all kinds issued by an insurer, agent or broker for presentation to members of
the insurance buying public, including but not limited to circulars, leaflets,
booklets, depictions, illustrations, and form letters; and
(3) prepared sales talks, presentations and
material for use by agents, brokers and solicitors.
B. "Policy" for the purpose of these rules
shall include any policy, plan, certificate, contract, agreement, statement of
coverage, rider or endorsement which provides accident or sickness benefits, or
medical, surgical or hospital expense 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.
C. "Insurer" for the
purpose of these rules shall include any individual, corporation, association,
partnership, reciprocal exchange, inter-insurer, Lloyds, fraternal benefit
society, health maintenance organization, and any other legal entity which is
defined as an "insurer" in the Insurance Code of this State and is engaged in
the advertisement of a policy as "policy" is herein defined.
D. "Exception" for the purpose of these rules
shall mean 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.
E. "Reduction" for the
purpose of these rules shall mean any provision which reduces the amount of the
benefit; a risk of loss is assumed but payment upon the occurrence of such loss
is limited to some amount or period less than would be otherwise payable had
such reduction not been used.
F.
"Limitation" for the purpose of these rules shall mean any provision which
restricts coverage under the policy other than an exception or a
reduction.
Section 2
Method of Disclosure of Required Information
All information required to be disclosed by these rules shall
be set out conspicuously and in close conjunction with the statements to which
such 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 advertisement so as to be
confusing or misleading.
Section
3 Form and Content of Advertisements
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.
B. 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.
Section 4 Advertisements of Benefits Payable,
Losses Covered or Premiums Payable
A.
Deceptive Words, Phrases or Illustrations Prohibited:
(1) No advertisement shall omit information
or use words, phrases, statements, references or illustrations if the omission
of such information or use of such 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.
(2) No advertisement shall contain or use
words or phrases such as, "all"; "full"; "complete"; "comprehensive",
"unlimited"; "up to"; "as high as"; "this policy will help pay your hospital
and surgical bills"; "this policy will help fill some of the gaps that Medicare
and your present insurance leave out"; "this policy will help to replace your
income" (when used to express loss of time benefits) or similar words or
phrases, in a manner which exaggerate the benefits beyond the terms of the
policy.
(3) An advertisement shall
not contain descriptions of a policy limitation, exception, or reduction,
worded in a positive manner to imply that it is a benefit, such as, describing
a waiting period as a "benefit builder", or stating "even pre-existing
conditions are covered after two years." Words and phrases used in an
advertisement to describe such policy limitations, exceptions and reductions
shall fairly and accurately describe the negative features of such limitations,
exceptions and reductions of the policy offered.
(4) No advertisement of a benefit for which
payment is conditional 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 in such a manner as to have the
capacity, tendency or effect of misleading the public into believing that the
policy advertised will, income way, enable them to make a profit from being
hospitalized.
(5) Advertisements
shall not overemphasize the total amount payable under hospital indemnity
coverage or other benefits from such policy, such as benefits for private duty
nursing, unless it provides, with substantially equal prominence and in close
conjunction with such statements, the actual amount payable per day for such
indemnity or benefit.
(6) No
advertisement of a policy covering only one disease or a list of specified
diseases shall 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.
(7) An advertisement
for a policy providing benefits for specified illnesses only, such as cancer,
or for specified accidents only, such as automobile accidents, shall clearly
and conspicuously in type more prominent than any other in the advertisement
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 IS A CANCER ONLY POLICY"; "THIS IS AN AUTOMOBILE
ACCIDENT ONLY POLICY."
(8) An
advertisement of a direct response insurance product shall not 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 such policies is a substantial
cost in the marketing of a direct response insurance product.
B. Exceptions, Reductions and
Limitations
(1) When an advertisement refers
to either a dollar amount or a period of time for which any benefit is payable,
or the cost of the policy, or specific policy benefit, or the loss for which
such 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 or tendency to mislead or
deceive.
(2) 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 a time period between the date a loss occurs and the date benefits
begin to accrue for such loss, an advertisement which is subject to the
requirements of the preceding paragraph shall disclose the existence of such
periods.
(3) An advertisement shall
not use the words "only"; "just"; "merely"; "minimum" or similar words or
phrases to describe the applicability of any exceptions and reductions, such
as: "This policy is subject to the following minimum exceptions and
reductions."
C.
Pre-Existing Conditions
(1) An advertisement
which is subject to the requirements of Section 4B shall, in negative terms,
disclose the extent to which any loss is not covered if the cause of such loss
is traceable to a condition existing prior to the effective date of the policy.
The term "pre-existing condition" without an appropriate definition or
description shall not be used.
(2)
When a policy does not cover losses resulting from pre-existing conditions, no
advertisement of the policy shall 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 thereunder. This rule limits 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 shall disclose that a
medical examination is required.
(3) When an advertisement contains an
application form to be completed by the applicant and returned by mail for a
direct response insurance product, such application form shall contain a
question or statement which reflects the pre-existing condition provisions of
the policy immediately preceding the blank space for the applicant's signature.
For example, such an application form shall contain a question or statement
substantially as follows:
"Do you understand that this policy will not pay benefits
during the first .... year(s) after the issue date for a disease or physical
condition which 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 ... year(s) after the issue
date on account of disease or physical condition which I now have or have had
in the past.
Section
5 Necessity for Disclosing Policy Provisions Relating to
Renewability, Cancellability and Termination
When an advertisement refers to either a dollar amount or a
period of time for which any benefit is payable, or the cost of the policy, or
specific policy benefit, or the loss for which such benefit is payable, it
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 which shall not minimize or
render obscure the qualifying conditions.
Section 6 Testimonials or Endorsements by
Third Parties
A. Testimonials used in
advertisements must 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, makes as its own all of the statements contained
therein, and the advertisement, including such statement, is subject to all the
provisions of these rules.
B. If
the person making a testimonial, an endorsement or an appraisal has a financial
interest in the insurer or a related entity as a stockholder, director,
officer, employee, or otherwise, such fact shall be disclosed in the
advertisement. If a person is compensated for making a testimonial, endorsement
or appraisal, such fact shall be disclosed in the advertisement by language
substantially as follows: "Paid Endorsement." This rule does not require
disclosure of union "scale" wages required by union rules if the payment is
actually for such "scale" for TV or radio performances. The payment of
substantial amounts, directly or indirectly, for "travel and entertainment" for
filming or recording of TV or radio advertisements remove the filming or
recording from the category of an unsolicited testimonial and require
disclosure of such compensation.
C.
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 organizations, unless such 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, such fact shall be disclosed in the
advertisement.
D. When a
testimonial refers to benefits received under a 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 years or
until the filing of the next regular report on examination of the insurer,
whichever is the longer period of time.
Section 7 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.
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 such advertisement.
Section 8 Identification of Plan or Number of
Policies
A. When 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
with the amount of the benefits selected.
B. When an advertisement refers to various
benefits which may be contained in two or more policies, other than group
master policies, the advertisement shall disclose that such benefits are
provided only through a combination of such policies.
Section 9 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 polices 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.
Section 10 Jurisdictional Licensing and
Status of Insurer
A. An advertisement which 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.
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
recommended, endorsed, or accredited by any division or agency of this State or
of the United States Government.
Section 11 Identity of Insurer
A. The name of the actual insurer and the
form number or numbers advertised shall be identified and made clear in all
advertisements. An advertisement shall not use a trade name, any insurance
group designation, name of the parent company of the insurer, name of a
particular division of the insurer, service mark, slogan, symbol, logo, or
other device which 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.
B. No advertisement shall
use any combination of words, symbols, or physical materials which 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.
Section
12 Group or Quasi-Group Implications
An advertisement of a particular policy shall not state or
imply that prospective insureds become group or quasigroup members covered
under a group policy and as such enjoy special rates or underwriting
privileges, unless such is the fact.
Section 13 Introductory, Initial or Special
Offers
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 such 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 such enrollment periods as the usual method of advertising 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 three 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 days and
not more than forty days from the date that such enrollment period is
advertised for the first time. This rule applies to all advertising media,
i.e., mail, newspapers, radio, television, magazines and periodicals, by any
one insurer. It is inapplicable to solicitations of employees or members of a
particular group or association which 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.
(3) This rule 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
such is the fact.
(4) The phrase "a
particular insurance product" in Paragraph 2. of this Section means an
insurance policy which 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.
B. An
advertisement shall not offer a policy which utilizes a reduced initial premium
rate in a manner which over-emphasizes 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.
C. Special awards,
such as a "safe drivers' award" shall not be used in connection with
advertisements of accident or accident and sickness insurance.
Section 14 Statements About an
Insurer
An advertisement shall not contain statements which 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 recommendation.
Section
15 Enforcement Procedures
A.
Advertising File
Each insurer shall maintain at its home office or principal
place of business 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 such other state, with a notation attached to each such
advertisement which shall indicate the manner and extent of distribution and
the form number of any policy advertised. Such file shall be subject to regular
and periodical inspection by this Department. All such advertisements shall be
maintained in said file for a period of either four 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 which is
now or which hereafter becomes subject to the provisions of these rules must
file with this Department with its Annual Statement a Certificate of Compliance
executed by an authorized officer of the insurer wherein it is stated that he
has examined each and every advertisement used in this State and to the best of
his knowledge, information and belief the advertisements which were
disseminated by the insurer during the preceding statement year complied or
were made to comply in all respects with the provisions of these rules and the
Insurance Laws of this State as implemented and interpreted by these
rules.
Section 16
Availability to Vermont Residents
Any advertisement aimed at a buying market located primarily
outside the State of Vermont which may incidentally be seen or heard in the
State of Vermont should have as its subject coverage and premiums approved for
use in Vermont. If such is not the case, the ad shall clearly indicate "Not
approved for sale in the State of Vermont."
Section 17 Severability Provision
If any Section or portion of a Section of these rules, or the
applicability thereof to any person or circumstance is held invalid by a court,
the remainder of the rules, or the applicability of such provision to other
persons or circumstances, shall not be affected thereby.
Section 18 Filing for Prior Review
Any insurer failing to comply with the requirements of this
regulation shall be subject to the following:
1. Upon the Commissioner's order, shall file
for approval, prior to its use, any advertisement used in connection with the
solicitation of a contract of insurance in the State of Vermont. For the
purpose of this Section, "prior to its use" shall mean the filing of such
advertising material at least thirty days prior to its use. Unless disapproved
by the Commissioner prior to the expiration of the 30 day period the
advertisement shall be deemed to be approved. The Commissioner may, in his
discretion, upon proof satisfactory to him that the failure to comply has been
corrected, rescind such order.
