California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.4 - Testimonials or Endorsements by Third Parties

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Testimonials used in advertisements must
				  be genuine, represent the current opinion of the author, be applicable to the
				  policy advertised and be accurately reproduced. The insurer, in using a
				  testimonial, makes as its own all of the statements contained therein, and the
				  advertisement, including such statement, is subject to all the provisions of
				  these regulations.
GUIDELINE 2536.4(a)
This Subsection must be applied in conjunction with Section
					 2536.5 and requires that all such
					 statements must be genuine and not fictitious. Under this subsection, the
					 manufacturing, substantive editing or "doctoring up" of a testimonial is
					 clearly prohibited as being false and misleading to the insurance buying
					 public. However, language which would be unacceptable under these rules must be
					 edited out of a testimonial.
A testimonial must also represent the current opinion of
					 the author. While an insurer is not required in each instance to check with the
					 author each time the testimonial is used to ascertain that the views expressed
					 have not altered, a testimonial should be checked before use in those instances
					 when a change in views might be probable or reasonable to assume. When a
					 testimonial is used more than one year after it was originally given, a
					 confirmation must be obtained.
The Subsection does not prohibit testimonials of a general
					 nature in which the author expresses appreciation for courteous treatment
					 received or prompt payment of claims.
(b) If the person making a testimonial, an
				  endorsement or an appraisal has a financial interest in the insurer or a
				  related entity as a stockholder, director, officer, employee, or otherwise,
				  such fact shall be disclosed in the advertisement. If a person is compensated
				  for making a testimonial, endorsement or appraisal, such fact shall be
				  disclosed in the advertisement by language substantially as follows: "Paid
				  Endorsement" or other words of similar import. This does not require disclosure
				  of union "scale" wages required by union rules if the payment is actually for
				  such "scale" for TV or radio performances. The payment of substantial amounts,
				  directly or indirectly, for "travel and entertainment" for filming or recording
				  of TV or radio advertisements removes the filming or recording from the
				  category of an unsolicited testimonial and requires disclosure of such
				  compensation. This subsection does not apply to an institutional advertisement
				  which has as its sole purpose the promotion of the insurer.
GUIDELINE 2536.4(b)
This Subsection requires the disclosure of any financial
					 interest of a person making a testimonial, endorsement or appraisal. Any
					 payment, direct or indirect, whether specifically for the testimonial or
					 endorsement or for any other services or relationship, is required to be
					 disclosed. Reimbursement for substantial travel and entertainment expenses is
					 also required to be disclosed; however, union scale wages required by union
					 rules are not required to be disclosed. Travel away from the home of the person
					 giving the testimonial or endorsement to a distant location involving
					 transportation expenses, lodging expenses or expenses for meals constitutes
					 payment and must be reflected as a paid endorsement. The requirement of
					 disclosure may be fulfilled by use of the phrase "Paid Endorsement" or words of
					 similar import in a type style and size that is identical to the endorser's
					 name. In the case of television or radio advertising, the paid nature of the
					 advertisement must be given prominence.
(c) An advertisement shall not state or imply
				  that an insurer or a policy has been approved or endorsed by an individual,
				  group of individuals, society, association or other organization, unless such
				  is the fact, and unless any proprietary relationship between an organization
				  and the insurer is disclosed. If the entity making the endorsement or
				  testimonial has been formed by the insurer or is owned or controlled by the
				  insurer or the person or persons who own or control the insurer, such fact
				  shall be disclosed in the advertisement.
GUIDELINE 2536.4(c)
This Subsection requires both that approval or endorsement
					 of a policy by an individual, group of individuals, society, association or
					 other organization be factual and that any proprietary relationship between the
					 sponsoring or endorsing organization and the insurer be disclosed. For example,
					 if the dividend under an association group case is payable to the association,
					 disclosure of that fact is required. Also, if the insurer or an officer of the
					 insurer formed or controls the association, that fact must be
					 disclosed.
(d) When a
				  testimonial refers to benefits received under a policy, the specific claim
				  data, including claim number, date of loss, and other pertinent information
				  shall be retained by the insurer for inspection for a period of four years or
				  until the filing of the next regular report on examination of the insurer,
				  whichever is the longer period of time.
GUIDELINE 2536.4(d)
This Subsection provides the Insurance Commissioner with
					 the means to verify the authenticity of testimonials used in advertising
					 efforts.
The use of testimonials which do not correctly reflect the
					 present practices of the insurer or which are not applicable to the policy or
					 benefit being advertised is not permissible.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).