28 TAC §21.103 and §21.114
1. INTRODUCTION.The Texas Department of Insurance proposes 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 proposed 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) . It is necessary to amend §21.103(c)(5) because it contains 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 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, it is necessary to amend §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 subclause (i) and (ii) because both clauses were in the existing text prior to the adoption of 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. 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) to §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), subclauses (i) and (ii) were inadvertently omitted. It was not the intent of the Commissioner to delete these subclauses. There were no proposed amendments to delete these subclauses 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 proposal amends existing §21.114(7)(C) to restore the omitted subclauses into §21.114(7)(C) consistent with the intent of the Commissioner.
2. FISCAL NOTE. Audrey Selden, Senior Associate Commissioner for the Consumer Protection Division, has determined that for each year of the first five years the proposed amendments will be in effect, there will be no fiscal impact to state government as a result of the enforcement or administration of the proposal. There will be no measurable effect on local employment or the local economy as a result of the proposal.
3. PUBLIC BENEFIT/COST NOTE. Ms. Selden also has determined that for each year of the first five years that the proposed amendments are in effect, the public benefit anticipated as a result of the proposed amendments will be a correct internal reference in §21.103(c)(5) that will result in easier use and readability of the rule and the restoration of inadvertently omitted text in §21.114(7)(C)(i) and (ii) that will result in a rule consistent with the intent of the proposal that is adopted in Commissioner's Order No. 07-1050. Because the sole purpose of the proposal is to correct clerical errors, there will be no economic cost to any individuals, insurers, or other Department regulated entities, regardless of size, as a result of the proposed amendments.
4. ECONOMIC IMPACT STATEMENT AND REGULATORY FLEXIBILITY ANALYSIS FOR SMALL AND MICRO BUSINESSES. In accordance with the Government Code §2006.002(c), the Department has determined that the proposed amendments will not have an adverse economic effect on small businesses or micro businesses. This is because the sole purpose of the proposal is to correct clerical errors. The proposal simply corrects an inadvertent incorrect internal reference and corrects an inadvertent omission of text and does not impose any new requirements or costs with which small or micro businesses must comply. Therefore, in accordance with the Government Code §2006.002(c), the Department is not required to prepare a regulatory flexibility analysis.
5. TAKINGS IMPACT ASSESSMENT. The Department has determined that no private real property interests are affected by this proposal and that this proposal does not restrict or limit an owner's right to property that would otherwise exist in the absence of government action and, therefore, does not constitute a taking or require a takings impact assessment under the Government Code §2007.043.
6. REQUEST FOR PUBLIC COMMENT. To be considered, written comments on the proposal must be submitted no later than 5:00 p.m. on September 15, 2008 to Gene C. Jarmon, General Counsel and Chief Clerk, Mail Code 113-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. An additional copy of the comment must be simultaneously submitted to Jack Evins, Director of the Advertising Unit, Consumer Protection Division, Mail Code 111-2A, Texas Department of Insurance, P.O. Box 149104, Austin, Texas 78714-9104. Any request for a public hearing must be submitted separately to the Office of Chief Clerk before the close of the public comment period. If a hearing is held, written and oral comments presented at the hearing will be considered.
7. STATUTORY AUTHORITY. The amendments are proposed 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.
8. CROSS REFERENCE TO STATUTE. The following statutes are affected by this proposal:
§21.103 and §21.114 Insurance Code §36.001
§21.103. Required Form and Content of Advertisements.
(a) - (b) (No change.)
(c) All information required to be disclosed by these sections will 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. Regarding Internet advertising, the disclosures required by the sections referenced in paragraphs (1) - (5) of this subsection may be provided through a conspicuous and clearly labeled link, provided that the link must be placed near the relevant information to which it relates, and must connect directly to the information necessary to comply with the applicable requirements:
(1) - (4) (No change.)
§21.114(3)(A)] of this subchapter (relating to Rules Pertaining Specifically to Life Insurance and Annuity Advertising).
(d) (No change.)
§21.114. Rules Pertaining Specifically to Life Insurance and Annuity Advertising. As can be made applicable and as necessary the same or similar test or standard as is stated hereafter within paragraph (1)(B) of this section is to be used as the standard in the interpretation of the provisions of this section.
(1) - (6) (No change.)
(7) Deception as to introductory, initial, or special offers.
(A) - (B) (No change.)
(C) An advertisement by an insurer may not state or imply, that a policy or combination of policies 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 such is the fact. An advertisement may not contain phrases describing an enrollment period as "special," "limited," or similar words or phrases if the insurer uses such enrollment periods as the usual method of advertising insurance.
(i) An enrollment period during which "a particular insurance product" may be purchased on an individual basis may 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 or substantially 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 may not be less than 10 days and not more than 40 days from the date that such enrollment period is advertised for the first time. This section applies to all advertising media: i.e., mail, newspaper, radio, television, magazine, and periodicals. It is inapplicable to solicitation 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. This section applies to all affiliated companies under common management or control. The phrase "a particular insurance product" as used herein is an insurance policy that 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, or an increase or decrease in any elimination period or waiting period from those available during an enrollment period for another policy are not sufficient to constitute the product being offered as a different product eligible for concurrent or overlapping enrollment periods.
(ii) There may not be 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.