806 KAR 14:121 - Minimum standards for the readability and intelligibility of insurance contracts

RELATES TO: KRS 304.14-130, 304.14-420-304.14-450

NECESSITY, FUNCTION, AND CONFORMITY: KRS 304.2-110 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 defined in KRS 304.1-010. KRS 304.14-420(2) requires the Commissioner of Insurance to promulgate administrative regulations to establish minimum standards for the readability and intelligibility of insurance contracts. KRS 304.14-450(1) requires the Commissioner of Insurance to promulgate administrative regulations establishing a list of type face styles acceptable for use in insurance contracts. This administrative regulation establishes the list of type face styles acceptable for use in insurance contracts, and the minimum standards for readability and intelligibility of insurance contracts.

Section 1. Definitions.

(1) "Amended" or "renewed" does not include changes or an extension of the term that are contractually granted and exercised by the policy owner or insured under the provisions of the policy;

(2) "Commissioner" is defined by KRS 304.1-050(1);

(3) "Personal lines insurance" means those personal lines of insurance established in KRS 304.14-420(1); and

(4) "Text" means all printed matter, except:

(a)

1. The name and address of the insurer;

2. The name, number, or title of the policy;

3. The table of contents or index;

4. Captions and subcaptions;

5. Specification or declarations pages;

6. Schedules; or

7. Tables; and

(b) Any policy language that is drafted to conform to the requirements of any federal law, administrative regulation, or agency interpretation, any medical terminology, and any policy language required by law or administrative regulation, but the insurer shall certify that the language is entitled to be excepted from the definition of "text" as established in this paragraph.

Section 2. Scope.

(1) This administrative regulation shall apply to all personal lines insurance policies delivered, issued for delivery, amended, or renewed in Kentucky on and after one (1) year from the effective date of this administrative regulation.

(2) This administrative regulation shall not apply to policies issued for conversion from policies not subject to this administrative regulation.

Section 3. Minimum Standards for Legibility. A personal lines insurance policy shall not be delivered, issued for delivery, amended, or renewed in Kentucky unless it is printed, except for specification or declarations pages, schedules, and tables, in not less than ten (10) point type, one (1) point leaded.

Section 4.

(1) The following type face styles shall be acceptable for personal lines insurance policies:

(a) Aldus;

(b) Alternate Gothic No. 3;

(c) American Typewriter Light;

(d) American Typewriter Medium;

(e) Americana;

(f) Andover (Palatino);

(g) Antique Olive Light;

(h) Aster;

(i) Auriga;

(j) Avant Garde Light;

(k) Avant Garde Book;

(I) Baskerville;

(m) Bembo;

(n) Benguiat Book;

(o) Bodoni;

(p) Bodoni Book;

(q) Bookman;

(r) Caledonia;

(s) Candida;

(t) Caslon Old Face No. 2;

(u) Century Expanded;

(v) Century Schoolbook;

(w)Chelmsford (Optima);

(x) Clarendon Light;

(y) Clearface;

(z) Crown (Century);

(aa) Egyptian;

(bb) Egyptian Light;

(cc) Electra;

(dd) Eurostile;

(ee) Fairfield Medium;

(ff) Friz Quadrata;

(gg) Garamond;

(hh) Garamond No. 3;

(ii) Goudy Oldstyle;

(jj) Hanover (Melior);

(kk) Helvetica Light;

(II) Helvetica;

(mm) Helvetica Condensed;

(nn) Highland (Calendonia);

(oo) Iridium;

(pp) Italia Book;

(qq) Janson;

(rr) Korinna;

(ss) Megaron Light (Helvetica Light);

(tt) Megaron Medium (Helvetica Medium);

(uu) Melior;

(vv) Memphis Light;

(ww) Memphis Medium;

(xx) Monticello;

(yy) News Gothic;

(zz) Optima;

(aaa) Orion;

(bbb) Palatino;

(ccc) Primer;

(ddd) Quorum Light;

(eee) Quorum Book;

(fff) Rotation;

(ggg) Sabon;

(hhh) Schoolbook;

(iii) Serif Gothic Light;

(jjj) Souvenir;

(kkk) Souvenir Light;

(lll) Stymie Medium;

(mmm) Stymie Light;

(nnn) Tiffany Light;

(000) Tiffany Medium;

(ppp) Times Roman;

(qqq) Trade Gothic Light;

(rrr) Trade Gothic;

(sss) Trade Gothic Condensed;

(ttt) Trade Gothic Extended;

(uuu) Triumvirant;

(vvv) Trump;

(www) Trump Medieval;

(xxx) Univers Light;

(yyy) Univers Medium;

(zzz) Univers No. 45;

(aaaa) Univers No. 46;

(bbbb) Univers No. 55;

(cccc) Univers No. 56;

(dddd) Univers No. 57; and

(eeee) Univers 45 Light.

(2) Any type face style selected other than those listed in subsection (1) of this section shall not be used unless approved by the commissioner. Extreme type styles including "Old English" or heavy block shall not be acceptable.

(3) Italics, bold face, and contrasting styles may be used to emphasize important or technical terms and for captions. If two (2) or more type face styles are used, these shall be visually compatible.

Section 5. Minimum Standards for Intelligibility.

(1) A personal lines insurance policy shall not be delivered, issued for delivery, amended, or renewed in this state unless the text achieves a minimum score of forty (40) on the Flesch reading ease test, or an equivalent score on any other reading test approved by the commissioner for use as an alternative that is comparable in result to the Flesch reading ease test.

(2) For the purposes of this section, a Flesch reading ease test score shall be measured by the following method:

(a) For policy forms containing 10,000 words or less of text, the entire policy form shall be analyzed. For policy forms containing more than 10,000 words, the readability of two (2) 200 word samples per page may be analyzed instead of the entire policy form. The samples shall be separated by at least twenty (20) printed lines. Any endorsement made a part of the policy may, at the determination of the insurer, be scored separately or as part of the policy.

(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 paragraphs (b) and (c) of this subsection subtracted from 206.835 equals the Flesch reading ease score for the policy form.

(e) For the purposes of paragraphs (b), (c), and (d) of this subsection, the following procedures shall be used:

1. A contraction, hyphenated word, or numbers and letters, if separated by spaces, shall be counted as one (1) word;

2. A unit of words ending with a period, semicolon, or colon, but excluding headings and captions, shall be counted as one (1) sentence; and

3. A syllable means a unit of spoken language consisting of one (1) or more letters of words as divided by an accepted dictionary. If the dictionary shows two (2) or more equally acceptable pronunciations of a word, the pronunciation containing fewer syllables may be used.

(3) Each policy form filing subject to this administrative regulation shall be accompanied by a certificate signed by an officer of the insurer or other insurer representative authorized by the board of directors stating that the policy form meets the minimum reading ease score on the test used, or stating that the score is lower than the minimum required, but the policy form may be approved in accordance with subsection (4) of this section.

(4) The commissioner may approve a policy form filing with a lower reading ease test score than the Flesch reading ease score required in subsection (1) of this section if he or she finds that a lower score:

(a) Will provide a more accurate reflection of the readability of a policy form;

(b) Is warranted by the nature of a particular policy form, or type or class of policy forms; or

(c) Is caused by certain policy language that is drafted to conform to the requirements of any federal or state law, administrative regulation, or agency interpretation.

Notes

806 KAR 14:121

16 Ky.R. 516; eff. 11-4-1989; TAm eff. 8-9-2007; Crt eff. 2-26-2020; 47 Ky.R. 1661, 2586; eff. 8-31-2021.

STATUTORY AUTHORITY: KRS 304.2-110, 304.14-420, 304.14-450(1)