The Texas Department of Insurance proposes amendments to §§21.102 - 21.104, 21.106 - 21.109, 21.113 - 21.116, 21.119, 21.120, and 21.122, and new §21.121 concerning insurance advertising, certain trade practices, and solicitation. The proposed amendments are necessary to implement HB 2251 and HB 2252, as enacted by the 80th Legislature, Regular Session, effective September 1, 2007, and May 17, 2007, respectively. HB 2251 defines institutional advertisements on Internet websites. HB 2251 also provides that an insurer must include all appropriate disclosures and information on an Internet web page when the page describes specific policies or coverage or includes an opportunity to apply for coverage or obtain a quote. HB 2251 also provides that advertisements may be permitted by Commissioner's rule to comply with the applicable rules relating to advertising by including a link to a web page that provides the necessary information to comply with the advertising rules. Additionally, HB 2251 allows insurers to advertise to the general public policies or coverages available only to members of an association; prohibits the use of an advertisement for an insurance product relating to Medicare coverage unless the advertisement includes the prominently displayed language "Not connected with or endorsed by the United States government or the federal Medicare program"; allows the term "PPO plan" to be used in advertisements when referring to a preferred provider benefit plan; requires that an advertisement for a guaranteed renewable accident and health insurance policy must include in a prominent place a statement indicating that the rates may change if the advertisement implies that the rates will not change and that the statement must generally identify the manner in which the rates may change; and provides that an advertisement subject to the Department's filing requirements that is the "same as substantially similar" to an advertisement previously reviewed and accepted by the Department is not required to be filed for review. HB 2252 concerns certain advertising practices that may be used in the marketing of accident and health insurance that are not considered discrimination or inducement.

The proposed amendments and new §21.121 are also necessary to revise existing rules to promote efficient and effective regulation of current advertising practices in the insurance market. The amendments also update statutory references resulting from the nonsubstantive revision of the Insurance Code and internal references.

§21.102 Definitions. The proposed amendments to §21.102(1)(F) change the defined term lead card solicitation to lead solicitation to better reflect the fact that some lead-generating strategies do not rely on reply cards to assemble prospective leads and deletes the word hereby which is superfluous. The proposed amendments also revise the definition of policy in §21.102(3) to include viatical or life settlement contracts, premium finance agreements, and any other product offered by an insurer and regulated by the Department. The proposal also amends the definitions of insurer and agent in §21.102(4) and (5), respectively, to reference viatical and life settlement providers and viatical and life settlement brokers and provider representatives, respectively. Section 3.1710 of this title (relating to Prohibited Practices Relating to Advertising and Solicitation; Applications and Contracts) subject viatical and life settlement contract advertising to the requirements in Chapter 21 Subchapter B of this title (relating to Insurance Advertising, Certain Trade Practices, and Solicitation). Viatical and life settlement providers, brokers and provider representatives are not licensed or registered as insurers or agents, nor is a viatical or a life settlement contract an insurance policy. However, the proposed amendment to the term agent clarifies how the requirements of Subchapter B are to be applied to parties advertising such contracts.

The proposed amendment to §21.102(6) changes the definition of institutional advertisement to reflect the changes mandated by HB 2251, codified as Insurance Code §541.082(b), (d) and (e). HB 2251, codified as Insurance Code §541.082 (e), mandates that a web page or navigational aid within an insurer's website that provides a link to another webpage that includes content which refers to a specific insurance policy, certificate of coverage, or evidence of coverage or provides an opportunity for an individual to apply for coverage or request a quote is classified as an institutional advertisement, provided that the webpage or navigational aid containing the link does not itself include such content. The proposed amendments incorporate HB 2251's Internet advertising provision into the definition of institutional advertisement, and with the purpose of promoting uniformity in classifying advertisements, apply the standard relating to the absence of the specified content to advertisements appearing in any media. However, advertisements in media other than the Internet that do not refer to a specific insurance policy, certificate of coverage, or evidence of coverage or that do not provide an opportunity for an individual to apply for coverage or to request a quote or other information, are considered to be institutional advertisements. The proposed amendments also correct the reference to the Texas Department of Insurance to reflect its current name and delete a reference to the Insurance Code Chapter 5, which is no longer accurate as a result of the non-substantive Insurance Code revisions. The deletion of the reference to Chapter 5 clarifies that communications regarding any line of insurance that insurers use only to explain legislatively mandated or Department-mandated changes, amendments, additions or innovations relative to forms, rules or rates subject to the Insurance Code, are institutional advertisements.

The proposed amendments add new paragraph (7) to §21.102 which establishes invitation to inquire as a defined term that would be generally applicable to all advertising. This definition will replace the existing definition of invitation to inquire in §21.113(a) and (b) (relating to Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising) which specifically concerns accident and health insurance advertising. The proposed amendments further add new paragraph (8) to §21.102 which establish invitation to contract as a defined term that would be generally applicable to all advertising. This definition will replace the existing definition of invitation to contract in §21.114(1) and (2) (relating to Rules Pertaining Specifically to Life Insurance Advertising) which specifically concerns life insurance advertising. The proposed definitions of invitation to inquire and invitation to contract establish a single new definition for each term and harmonize these new definitions with the definition of institutional advertising derived from HB 2251, and make the definitions applicable to the advertising of all products subject to the Department's regulation.

§21.103. Required Form and Content of Advertisements. The proposed amendment to §21.103(b) corrects the reference to the Texas Department of Insurance to reflect its current name. The proposed amendment to §21.103(c) is necessary to implement the provision of HB 2251, codified as Insurance Code §541.082(c), which allows the Commissioner of Insurance to permit specified disclosures required in Internet advertising to be made through links to web pages containing the required disclosures. The proposed amendment is also necessary to require that such a link be clearly labeled, and conspicuously placed near the relevant information to which it relates. The proposed amendment also identifies the specific disclosures in new §21.103(c)(1) - (5) which may be satisfied through such links.

§21.104. Requirement of Identification of Policy or Insurer. The proposed amendments to §21.104(a) provide that an advertisement must reflect the identity of the person or entity responsible for it. The amendments also redefine the current requirement to display an insurer's full name to apply only to invitation to inquire and invitation to contract advertisements, and to apply the requirement uniformly to all lines of insurance. The amendments further require that, in institutional advertisements, the requirement may be satisfied by stating an agent's licensed name, registered assumed name, or Texas license number.

The proposed amendments to §21.104(d) are necessary to clarify that the requirements for identification of the products advertised must include viatical and life settlement contracts. The amendments also permit the requirement to identify the product advertised to be satisfied if the advertised product is identified in the manner in which it is classified or addressed by rule or as filed with the Department. The amendments are also necessary to conform the existing §21.104(d) to provisions of HB 2251, codified as Insurance Code §541.085, by specifically permitting preferred provider benefit plans to be identified in advertisements as PPO plans.

The proposed addition of new §21.104(i) is necessary to regulate advertisements that promote multiple insurers' products, a practice sometimes referenced as co-branding. The proposed subsection requires that such advertising clearly identify which insurer issues each product advertised, and that each insurer has sole financial responsibility for the products it issues.

§21.106. Premiums. The proposed amendment to §21.106(c) is necessary to clarify that advertisements referencing optional endorsements, riders, or other benefits that are available at an additional cost, must disclose that such additional cost is required. The proposed amendment to §21.106(c) also deletes the existing rule pertaining to invitation to contract advertisements of endorsements or riders because proposed new §21.106(d) addresses such advertisements. Proposed new §21.106(d) requires that, with respect to an invitation to contract, advertisements that provide premiums and advertise an endorsement, rider or other optional benefit must separately disclose the additional premium required for any optional benefit advertised. Existing §21.106(d), requiring that advertisements dealing with the availability of credit card billing of premiums must disclose that such billing is clearly optional, is proposed to be redesignated as §21.106(e).

The proposed addition of new subsection (f) to §21.106 is necessary to add the requirement that, if an invitation to contract advertisement provides a premium or range of premiums that are subject to change during the term of the coverage offered, the advertisement must disclose the possibility of such rate change. This is necessary because consumers may be harmed by advertising that may state or imply that the premiums provided in the advertising would be in effect through the offered policy's term.

§21.107. Testimonials, Appraisals or Analyses. The proposed amendments to §21.107(a), which add new paragraphs (1) - (4), provide that a person or entity making a testimonial, recommendation, or endorsement is deemed to be a spokesperson for an insurer or agent if the person or entity has certain proprietary or other financial relationships with the insurer or agent, or is compensated for making the testimonial, recommendation or endorsement. This is necessary for the purposes of defining possible conflicts of interest among persons making testimonials, recommendations, or endorsements. The proposed amendments also delete existing subsection (a) relating to testimonials, appraisals, and analyses used in advertisements by persons who are not spokespersons because it is addressed in the proposed amendments to §21.107(e). The proposed amendment to §21.107(b) corrects the reference to the Texas Department of Insurance to reflect its current name.

The proposed amendments to §21.107(d) are necessary to conform the advertising rules to HB 2251, codified as Insurance Code §541.083, to permit an insurer or agent to advertise to the general public policies available only to members of associations described by Insurance Code §1251.052. The amendments also require that, if such associations' boards of directors are not elected by the association's members, the advertisement, unless it relates only to long-term care insurance, must disclose this fact, and the fact that the directors may agree to rate increases for those policies. The reason for this proposed amendment is to provide consumers with notice of the degree of control the associations' directors have over rate changes. This subsection is also proposed to be amended to reference the relationships described in the proposed amendments to subsection (a) defining a spokesperson, and to require prominent disclosure in an advertisement when the fact of such a relationship exists. The reason for this proposed amendment is to identify potential conflicts of interest involving spokespersons. The part of subsection (d) relating to the relationships that require disclosure of a person making a testimonial, an endorsement, or an appraisal is proposed to be deleted because the provision is addressed in the proposed amendments to subsection (a).

The proposed amendments to §21.107(e) require that a person making a testimonial or recommendation who is not a spokesperson must represent the current opinion of the author and must reflect the author's opinions or experiences with the insurer or its products. This requirement is necessary to assure truthful representation by such persons. The part of subsection (e) regulating certain advertisements containing testimonials, endorsements, recommendations, or similar announcements is proposed to be deleted because the prohibition is unnecessary for effective regulation of such advertisements by the Department. The language is unnecessary because other provisions in §21.107 will adequately protect consumers regarding testimonials, endorsements, recommendations, and similar announcements.

The proposed amendments to §21.107(f) require that a testimonial, endorsement or recommendation be applicable to the policy advertised or, if no specific policy is advertised, to the insurer. The amendments further require that any such testimonial, endorsement or recommendation be accurately reproduced. The part of existing subsection (f) relating to limitations on certain testimonials, recommendations, or endorsements is proposed to be deleted because the regulation is not necessary for effective regulation of such testimonials, endorsements, or recommendations. The language is unnecessary because other provisions in §21.107 will adequately protect consumers regarding testimonials, endorsements, and recommendations.

Proposed new §21.107(h) prohibits a testimonial, recommendation or endorsement by a party other than the insurer issuing the policy or the insurer's agent from making representations or promises of future policy outcomes. This is necessary to assure truthful representations by such parties.

§21.108. Use of Statistics and Citations. The proposed amendment that adds "Citations" to the title of §21.108 is necessary to more accurately reflect the range of advertising content addressed within that section. The proposed amendments to §21.108(a) clarify that statistics may not imply that they are derived from the type of product advertised, rather than "from the policy advertised" as provided in the existing rule, unless such is the fact, and that if statistics apply to other types of products, the advertisement must specifically so state. These amendments are necessary because the existing rule can be read as unnecessarily restricting such statistics to a specific policy form.

The proposed amendments to §21.108(b) clarify that sources must be given for citations used in advertisements, in addition to sources for statistics. The amendments also require that the advertisement include the source's publication name and date, and that, absent the advertiser's certification that the source is the most recent available, a source may not be more than five years old. These proposed amendments are necessary because consumers should be able to readily identify and access the original source of statistics and citations. Proposed new §21.108(c) requires that, where an advertisement contains a reference to average costs or savings, the advertisement must indicate whether such costs or savings reflect a national or regional average; if a regional average, the advertisement must identify the region. This new requirement is necessary because the absence of such clarification can produce misunderstandings among consumers regarding savings or costs prevailing in their region.

§21.109. Unlawful Inducement. The proposed amendments to §21.109(a) implement the requirements of HB 2252, codified as Insurance Code §541.058, relating to certain advertising practices that may be used in the marketing of accident and health insurance that are not considered prohibited discrimination or inducement. The amendments permit advertising for health and accident coverages to include the availability of health-related services or health-related information. Such advertising must disclose any separate charge required to access such services or information. The proposed amendments define health-related services and health-related information in accordance with Insurance Code §541.058. That statute defines health-related services as services directed to an individual's health improvement or maintenance. The statute also defines health-related information as information directed to an individual's health improvement or maintenance, or to costs associated with options available to a covered person under the accident and health coverage. The proposed amendments also require that an advertisement referencing noncontractual health-related services or information to disclose that the services or information are not a part of the policy, may be discontinued at any time and, if applicable, may be subject to geographic availability. This new requirement is necessary to prevent consumers from obtaining a false expectation of contractual rights to or the cost or availability of such services or information.

Proposed new §21.109(c) requires that an advertisement may offer an incentive to inquire about a policy if the advertisement clearly and conspicuously discloses that purchase of the policy is not required in order to receive the incentive. This will permit, for example, the offer in an advertisement of an incentive for requesting a quote, so long as the advertisement contains a clear and conspicuous statement such as "no purchase required." This new requirement is necessary to help prevent consumers from feeling obligated to purchase a policy to obtain the advertised incentives.

§21.113. Rules Pertaining Specifically to Accident and Health Insurance Advertising and Health Maintenance Organization Advertising. The proposed amendments to subsection (a) of §21.113 move the current provision in subsection (a)(2), relating to required notice for certain invitation to inquire advertisements, to subsection (a). The amendments also propose to delete the definition of invitation to inquire in existing §21.113(a) because of the proposed new definition added in §21.102(7).