The Commissioner of Insurance adopts amendments to §21.103(c)(5) and §21.114(7)(C), relating to required form and content of insurance advertisements and rules pertaining specifically to life insurance and annuity advertising. The sections are adopted without changes to the proposed text published in the August 15, 2008, issue of the Texas Register (33 TexReg 6545).

REASONED JUSTIFICATION. The amendments are necessary to correct clerical errors contained in Commissioner's Order No. 07-1050 entered and dated November 20, 2007, and published in the November 30, 2007, edition of the Texas Register (32 TexReg 8830), effective December 9, 2007.

Amendment to §21.103(c)(5). The adopted amendment to §21.103(c)(5) corrects an erroneous internal reference. Section 21.103 specifies certain required form and content of advertisements that insurers are allowed to use in Texas to advertise their insurance products to Texas consumers. Commissioner's Order No. 07-1050 adopted an amendment to §21.103(c) to implement the provision of HB 2251, 80th Legislature, Regular Session, effective September 1, 2007, codified as Insurance Code §541.082(c). Section 541.082(c) 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 adopted amendment was also necessary to require that such a link be clearly labeled and conspicuously placed near the relevant information to which it relates. The adopted amendment in Commissioner's Order No. 07-1050 further identifies certain specific disclosures in new §21.103(c)(1) - (5) which may be satisfied through such links. In Commissioner's Order No. 07-1050, §21.103(c)(5) refers to "§21.114(3)(A) of this subchapter (relating to Rules Pertaining Specifically to Life Insurance and Annuity Advertising)." This reference to §21.114(3)(A) is intended to be a reference to the "identification of policy disclosure" that requires the form number or numbers of a policy advertised to be clearly identified in an invitation to contract. Instead, §21.114(3)(A) refers to advertising requirements for the description of premiums and costs paid for individual insurance and annuities. The correct reference is §21.114(1)(A). Therefore, the adopted amendment amends §21.103(c)(5) to reference §21.114(1)(A), the proper reference to the identification of the policy form number disclosure.

Amendment to §21.114(7)(C). It is necessary to amend §21.114(7)(C) to include clauses (i) and (ii). This is necessary because both clauses were in the existing text prior to the adoption of the amendments to §21.114 in Commissioner's Order No. 07-1050 but were inadvertently omitted from the adoption order. Section 21.114(7)(C) specifies that an advertisement by an insurer may not state or imply an offer of a policy is an introductory, initial, special, or limited offer and that applicants will receive advantages by accepting the offer or that such advantages will not be available at a later date unless it is a fact. Additionally, the provision specifies that an advertisement may not contain phrases describing an enrollment period as "special" or "limited" if the insurer uses such enrollment periods as the usual method of advertising. Clause (i) that was inadvertently omitted regulates advertisements relating to the offering of a particular insurance product for purchase on an individual basis during an enrollment period for that particular insurance product. Clause (ii) that was inadvertently omitted prohibits the inclusion in such advertisements of a 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. In Commissioner's Order No. 07-1050, the only amendment to §21.114(9)(C) (relating to deception as to introductory, initial, or special offers) that was intended to be adopted was the re-designation of §21.114(9)(C) as §21.114(7)(C). However, in Commissioner's Order No. 07-1050, in addition to §21.114(9)(C) being re-designated as §21.114(7)(C), clauses (i) and (ii) were inadvertently omitted. It was not the intent of the Commissioner to delete these clauses. There were no proposed amendments to delete these clauses in the notice of the proposed rule published in the September 28, 2007, issue of the Texas Register (32 TexReg 6730). Commissioner's Order No. 07-1050 also does not contain any explanation or mention of the Commissioner's intent to make such deletions. This adoption amends existing §21.114(7)(C) to restore omitted clauses (i) and (ii) into §21.114(7)(C) consistent with the intent of the Commissioner.

HOW THE SECTIONS WILL FUNCTION. The adopted amendment to §21.103(c)(5) deletes the erroneous reference to §21.114(3)(A) and substitutes the correct reference to §21.114(1)(A). Section 21.103 specifies certain required form and content of advertisements that insurers are allowed to use in Texas to advertise their insurance products to Texas consumers. Section 21.103(c) requires that all information required to be disclosed must be set out conspicuously and in close conjunction with the statements to which the information relates or with appropriate captions of such prominence that required information is not minimized, rendered obscure, or presented in an ambiguous fashion, or intermingled with the context of the advertisement so as to be confusing or misleading. It further provides that with regard to Internet advertising, the required disclosures referenced in paragraphs (1) - (5) of subsection (c) may be provided through a conspicuous and clearly labeled link, provided that the link is placed near the relevant information to which it relates. The link must also connect directly to the information necessary to comply with the applicable requirements. Paragraph (5) correctly references §21.114(1)(A), which requires that in the identification of the policy, the form number or numbers of the policy advertised be clearly identified in an "invitation to contract."

The adopted amendments to §21.114(7)(C) add clauses (i) and (ii) that were in the existing rules prior to the adoption of the amendments to §21.114 in Commissioner's Order No. 07-1050 issued in November 2007. The addition of the two clauses restores the same provisions that were in §21.114(9)(C) prior to the November 2007 adoption. Section 21.114(7)(C) specifies that an advertisement by an insurer may not state or imply an offer of a policy is an introductory, initial, special, or limited offer and that applicants will receive advantages by accepting the offer or that such advantages will not be available at a later date unless it is a fact. Additionally, the provision specifies that an advertisement may not contain phrases describing an enrollment period as "special" or "limited" if the insurer uses such enrollment periods as the usual method of advertising. Clause (i) regulates advertisements relating to the offering of a particular insurance product for purchase on an individual basis during an enrollment period for that particular insurance product. Clause (ii) prohibits the inclusion in such advertisements of a 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.

SUMMARY OF COMMENTS. The Department did not receive any comments on the published proposal.

STATUTORY AUTHORITY. The amendments are adopted pursuant to §36.001 of the Insurance Code which authorizes the Commissioner of Insurance to adopt any rules necessary and appropriate to implement the powers and duties of the Texas Department of Insurance under the Insurance Code and other laws of this state.