806 KAR 12:010 - Advertising of accident and sickness benefits

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.
(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.


806 KAR 12:010
I-12.02; 1 Ky.R. 863; eff. 5-14-75; TAm eff. 8-9-2007; Crt eff. 2-26-2020; 47 Ky.R. 1079, 1566; eff. 5-4-2021; 48 Ky.R. 1657, 2222; eff. 5/3/2022.


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