California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.5 - Use of Statistics

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  An advertisement relating to the dollar amounts of claims paid, the number of
				  persons insured, or similar statistical information relating to any insurer or
				  policy shall not use irrelevant facts and shall not be used unless it
				  accurately reflects all of the relevant facts. Such an advertisement shall not
				  imply that such statistics are derived from the policy advertised unless such
				  is the fact, and when applicable to other policies or plans shall specifically
				  so state.
GUIDELINE 2536.5(a)
This Subsection prohibits the use of statistics in a manner
					 which is misleading and deceptive. It requires the disclosure of all relevant
					 facts and prohibits the use of irrelevant facts. An advertisement shall
					 specifically identify the policy to which statistics relate and, where
					 statistics are given which are applicable to a different policy, it must be
					 stated clearly that the data do not relate to the policy being
					 advertised.
Statistics which describe the insurer, such as assets,
					 corporate structure, financial standing, age, product lines or relative
					 position in the insurance business, may be irrelevant and, if used at all, must
					 be used with extreme caution because of their potential for misleading the
					 public. As a specific example, an advertisement for a health insurance policy
					 which refers to the amount of life insurance which the company has in force or
					 the amounts paid out in life insurance benefits is not permissible unless the
					 advertisement clearly indicates the amount paid out for each line of
					 insurance.
An advertisement which states the dollar amount of claims
					 paid must also indicate the period over which such claims have been
					 paid.
If the term "loss ratio" is used, it shall be properly
					 explained in the context of the advertisement and, unless a regulation is
					 subsequently issued otherwise defining the term, it shall be calculated on the
					 basis of premiums earned to losses incurred and shall not be on a yearly
					 run-off basis.
(b) An
				  advertisement shall not represent or imply that claim settlements by the
				  insurer are "liberal" or "generous," or use words of similar import, or that
				  claim settlements are or will be beyond the actual terms of the contract. An
				  unusual amount paid for a unique claim for the policy advertised is misleading
				  and shall not be used.
GUIDELINES 2536.5(b)
This Subsection prohibits deceptive or misleading
					 statements in an advertisement regarding an insurer's claim settlement
					 practices. It also prohibits the use of an unusual amount paid for a unique
					 claim or an unusual claim whether actual or hypothetical.
(c) The source of any statistics used in an
				  advertisement shall be identified in such advertisement.
GUIDELINE 2536.5(c)
This Subsection requires any advertisement which uses
					 statistics to cite the source. The rule does not require that statistics for
					 this State be used since such statistics as hospital charges and average stays
					 may vary from state to state. When nationwide statistics are used such fact
					 should be noted as such unless the statistics on the particular point are
					 substantially the same as those for this State. Statistics may be used only if
					 they are credible.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).