No. 36493 (Amendment): Rule R590-130. Rules Governing Advertisements of Insurance

(Amendment)

DAR File No.: 36493
Filed: 07/12/2012 04:43:56 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

This rule is being updated to include electronic forms of advertising that are now common.

Summary of the rule or change:

The following changes are being made in the rule: the definition of "Advertisement" is being expanded to include advertising on the website and emails; a new Enforcement Date Section is being added to the rule; the Severability Provision section is being changed to follow the wording that is now being used in this section; and due to the addition of a new section, the last three sections are being re-numbered.

State statutory or constitutional authorization for this rule:

• Subsection 31A-2-201(3)
• Section 31A-23a-402

Anticipated cost or savings to:

the state budget:

It is anticipated that by including the terms "website" and "email" in the definition of advertising it will be easier to regulate advertising violations that take place on the website and in emails. If this is the case. then a few more fines may be added to the General Fund, although it should be noted that oftentimes when a violation is found, the licensee is asked to correct the violation and no fine is imposed. It is when the violation is egregious and/or has been done multiple times that a fine is levied. The department will not need to hire additional employees.

local governments:

This rule only affects licensees of the Insurance Department. It will have no effect on local governments.

small businesses:

This rule will have a fiscal impact on individuals and agencies licensed to sell insurance in Utah who are found to be violating this rule. Normally when a violation is found, the licensee is asked to correct the situation and if they do then no fine is imposed. It is when the violation is egregious and/or has been done multiple times that a fine is levied. Currently violations are occurring weekly. The amount of a fine for an individual can go as high as $2,500 and for an agency $5,000.

persons other than small businesses, businesses, or local governmental entities:

Almost all of the 1,600 Utah licensed insurers are large businesses. They will also be required to comply with this rule. However, at this time they are not violating this law by email or on the web.

Compliance costs for affected persons:

This rule will have a fiscal impact on individuals and agencies licensed to sell insurance in Utah who are found to be violating this rule. Normally when a violation is found, the licensee is asked to correct the situation and if they do then no fine is imposed. It is when the violation is egregious and/or has been done multiple times that a fine is levied. Currently violations are occurring weekly. The amount of a fine for an individual can go as high as $2,500 and for an agency $5,000.

Comments by the department head on the fiscal impact the rule may have on businesses:

The changes to this rule will only affect those violating the advertising law and rule. The majority of those found to be in violation will receive instruction on the law and will be asked to correct the problem. First time violators will not normally be fined.

Neal T. Gooch, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Insurance
Administration
Room 3110 STATE OFFICE BLDG
450 N MAIN ST
SALT LAKE CITY, UT 84114-1201

Direct questions regarding this rule to:

• Jilene Whitby at the above address, by phone at 801-538-3803, by FAX at 801-538-3829, or by Internet E-mail at [e-mail]

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

08/31/2012

This rule may become effective on:

09/07/2012

Authorized by:

Jilene Whitby, Information Specialist

RULE TEXT

R590. Insurance, Administration.

R590-130. Rules Governing Advertisements of Insurance.

R590-130-4. Definitions.

A (1) An "Advertisement" for the purpose of this rule shall include:

(a) printed and published material, audio or visual material, and descriptive literature of an insurer used in direct mail, newspapers, magazines, radio scripts, TV scripts, websites, emails, billboards and similar displays; and

(b) prepared sales talks, presentations and material for use by producers and solicitors whether prepared by the insurer or the producer or solicitor, when used for members of the insurance buying public, whether mailed or delivered in person.

(2) The definition of advertisement includes promotional material included with a policy when the policy is delivered as well as material used in the solicitation of renewals and reinstatements.

B. "Institutional Advertisement" for the purpose of this rule shall mean an advertisement having as its sole purpose the promotion of the reader's, viewer's or listener's interest in the concept of insurance, or the promotion of the insurer as a seller of insurance.

C. "Invitation to Contract" for the purpose of this rule shall mean an advertisement regarding a specific insurance product and which describes one or more of the provisions of the contract for that product.

D. "Invitation to Inquire" for the purpose of this rule shall mean an advertisement having as its objective the creation of a desire to inquire further about insurance and which is limited to a brief description of coverage, and which shall contain a provision in the following or substantially similar form:

"This policy has (exclusions) (limitations) (reduction of benefits) (terms under which the policy may be continued in force or discontinued). For costs and complete detail of the coverage, call (or write) your insurance agent or the company (whichever is applicable)."

E. "Preneed funeral contract" shall mean an agreement by or for an individual before the individual's death relating to the purchase or provision of specific funeral or cemetery merchandise or services,which is funded, at least in part, by insurance.

 

R590-130-15. Enforcement Date.

The commissioner shall begin enforcing the revised provisions of this rule on the effective date.

 

R590-130-[15]16. Severability Provision.

If any provision or clause of this rule or the application of it to any person or situation is held to be invalid, that invalidity shall not affect any other provision or application of this rule which can be given effect without the invalid provision or application, and to this end the provision of this rule are declared to be severable[section or portion of a section of these rules, or the applicability thereof to any person or circumstance is held invalid by a Utah or Federal court, the remainder of the rules, or the applicability of such provision to other persons or circumstances, shall not be affected thereby].

 

R590-130-[16]17. Filing for Prior Review.

The commissioner may, at his discretion, require the filing with the department, for review prior to use, of advertising material, for informational purposes only.

 

KEY: insurance law

Date of Enactment or Last Substantive Amendment: [1990]2012

Notice of Continuation: September 15, 2010

Authorizing, and Implemented or Interpreted Law: 31A-2-201; 31A-23a-402

 

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