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California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.21 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
As used in this article:
(a) "Modified guaranteed annuity" means a
				  deferred annuity contract, individual or group, the underlying assets of which
				  are held in a separate account, and the values of which are guaranteed if held
				  for specified periods. The contract contains nonforfeiture values that are
				  based upon a market-value adjustment formula if held for shorter periods. This
				  formula may, or may not, reflect the value of assets held in the separate
				  account. The assets underlying the contract must be in a separate account
				  during the period, or periods, when the contract holder can surrender the
				  contract;
(b) "Agent" means any
				  person licensed as a life and disability or life only agent under the
				  provisions of Chapter 5 (commencing with Section
				  1621), Part 2, Division 1, of the
				  Insurance Code, more particularly defined in Section
				  1626 thereof;
(c) "Variable Contract Agent" means an agent
				  licensed to transact, or required to be licensed to transact variable contracts
				  by Article 16 (commencing with Section
				  1758.1), Chapter 5, Part 2,
				  Division 1, of the Insurance Code;
(d) "Interest Credits" means all interest
				  that is credited to the contract;
(e) "Separate Account" means a separate
				  account established according to Section
				  10506, or pursuant to the
				  corresponding section of the insurance laws of the state of domicile of a
				  foreign or alien insurer;
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h),
						10506.3(a),
						1621-
						1630,
						1758.1-
						1758.5 and
						10506,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.22 - Obtaining Certification Permitting Transaction of Modified Guaranteed Annuity Business

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
No insurer shall deliver or issue for delivery in this
					 State any modified guaranteed annuity until it has received in writing from the
					 Commissioner a certification that such insurer meets all the standards for
					 transacting business required by California Insurance Code Section
					 10506. A
					 certification may be obtained by filing an application (which includes the
					 information specified in section
					 2534.23 or section
					 2534.24 of this article) with the
					 Commissioner; payment of the minimum filing fee required by California
					 Insurance Code Section
					 10506.1;
					 and in the case of a domestic insurer, payment of an additional amount as may
					 be assessed by the Commissioner pursuant to said California Insurance Code
					 Section
					 10506.1.
					 The application shall be verified by an executive officer of the insurer. The
					 Commissioner shall advise applicants in writing within 90 days of receipt of
					 the application whether the application is complete and accepted for filing;
					 or, if the application is deficient the Commissioner shall advise the applicant
					 what specific information is required. After a completed application is
					 received, the Commissioner shall advise applicants, in writing, within one year
					 whether certification is granted or denied.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h),
						10506.3(a),
						10506,
						10506.1,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.23 - Application of Domestic Insurers

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The application of a domestic insurer to write any modified
					 guaranteed annuity shall include the following:
(a) A copy of the resolution of its board of
				  directors, certified by the secretary or equivalent officer under corporate
				  seal to be a full and true copy thereof, authorizing the establishing of one or
				  more separate accounts for the purposes authorized by Section
				  10506;
(b) A copy of each written agreement
				  specifying how each such separate account is to be established, maintained and
				  administered, including for information purposes a copy of each modified
				  guaranteed annuity proposed to be delivered or issued for delivery in
				  California;
(c) A statement of the
				  additional amount, if any, of the insurer's assets, other than those amounts
				  received from modified guaranteed annuity holders for deposit in such a
				  separate account, which have been allocated to a separate account pursuant to
				  the authority of California Insurance Code Section
				  10506(b).
				  No more than 1% of its admitted assets, or 5% of the excess of its admitted
				  assets over its liabilities and required reserves, both as of the preceding
				  December 31, whichever is the smaller, may be so allocated;
(d) A statement of the history, organization,
				  ownership and control of the insurer. Any changes in organization, ownership or
				  control which are contemplated shall also be set forth. Reference to past
				  official examination reports, whether by California or other insurance
				  regulatory authority, if appropriately brought up to date, is acceptable.
				  Similarly, reference to other records bearing upon such matters, which have
				  become part of the Commissioner's official files, are acceptable;
(e) A brief balance sheet statement of
				  assets, liabilities, capital and surplus, as shown by its last filed Annual
				  Statement. The Annual Statement filed will be relied upon for
				  details;
(f) A complete statement
				  of the plan and methods, including the marketing methods for the transaction of
				  the modified guaranteed annuity and related business, which shall show:
(1) The status of the insurer of each of the
				  separate accounts with the Federal Securities and Exchange Commission,
				  including;
(A) Any exemption granted under
				  Section 3(c)(11) of the
				  Investment Company Act of 1940 and Section
				  3(a)(2) of the
				  Securities Act of 1933;
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.24 - Application of Foreign Insurer

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The application of a foreign insurer, including a Canadian
					 insurer, shall include all of the matters required of a domestic insurer,
					 except those specified in Paragraph (a) of Section
					 2534.23 hereof. The Commissioner
					 shall give due regard to the regulatory activities of the applicant's
					 domiciliary state in passing upon the qualifications of such foreign insurer to
					 transact a modified guaranteed annuity business in California. If the
					 Commissioner requires, a foreign insurer shall furnish a copy of the statutes
					 and regulations of its domiciliary state under which it is authorized to
					 transact a modified guaranteed annuity business and which regulate such
					 transaction.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506,
						10506(h)
						and
						10506.3(a),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.25 - Certificate of Qualification Required

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
If the Commissioner is satisfied after review of the
					 application described in sections
					 2534.22,
					 2534.23, and
					 2534.24 of this article that the
					 insurer meets the statutory requirements of California Insurance Code Section
					 10506 and
					 that its proposed operations will not be hazardous to the public or its
					 policyholders in this state, the Commissioner shall issue a certificate
					 pursuant to Section
					 2634.22 of this
					 article.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h),
						10506.3(a),
						and
						10506,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.27 - Filing and Approval of Policy Forms

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
All modified guaranteed annuity policy forms (the term
					 "policy forms" as used in this Section means any individual policy delivered or
					 issued for delivery in this State and any document attached to and made a part
					 of such policy, and any group policy delivered or issued for delivery in this
					 state and any document attached to and made a part of such group policy and any
					 group certificate delivered pursuant to the provisions of such group policy),
					 including contracts providing fixed dollar benefits as may be included in the
					 operation of any separate account shall be submitted to the Commissioner prior
					 to delivery or issuance for delivery in this State, and no such form shall be
					 delivered or issued for delivery in this State until the use of such form has
					 been approved in writing by the Commissioner. Filings shall include a
					 demonstration in a form satisfactory to the Commissioner that the nonforfeiture
					 provisions of the contracts comply with Section
					 2534.28(b), as
					 well as a certification by a member of the American Academy of Actuaries as to
					 the compliance with Section
					 2534.28(b).
The Commissioner may disapprove any policy form which is
					 unfair, unreasonable, or otherwise inconsistent with the provisions of the
					 California Insurance Code. The fees for such approval shall be the fees set
					 forth in California Code of Regulations, Title 10, Chapter 5, Subchapter 2,
					 Section 2202(a)(10). The
					 provisions of California Insurance Code Section
					 12957 shall
					 be applicable to modified guaranteed annuity forms.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No. 13).
2.
					 Amendment of section and Note filed 11-9-2006; operative 11-9-2006 pursuant to
					 Government Code section
					 11343.4
					 (Register 2006, No. 45).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h),
						10506.3(a)
						and
						12957,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.28 - Modified Guaranteed Annuity Contract Requirements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Mandatory Contract Benefit and Design
				  Requirements.
(1) Any modified guaranteed
				  annuity contract delivered or issued in this state shall contain a statement of
				  the essential features of the procedures to be followed by the insurance
				  company in determining the dollar amount of nonforfeiture benefits.
(2) No modified guaranteed annuity contract
				  calling for the payment of periodic stipulated payments shall be delivered or
				  issued for delivery in this state unless it contains in substance the following
				  provisions:
(A) A provision that there shall
				  be a grace period of thirty (30) days or of one month during which the contract
				  shall remain in force and, within which any payment due to the insurer other
				  than the first may be made. The contract may include a statement of the basis
				  for determining the date as of which any such payment received during the grace
				  period shall be applied to produce the values under the contract;
(B) A provision that, at any time within one
				  year from the date of default, the contract may be reinstated upon payment to
				  the insurer of such overdue payments as required by contract, and of all
				  indebtedness to the insurer on the contract, including interest. Reinstatement
				  may not occur if the cash value has been paid. The contract may include a
				  statement of the basis for determining the date as of which the amount to cover
				  such overdue payments and indebtedness shall be applied to produce the values
				  under the contract;
(C) A provision
				  that, except and to the extent set out in contracts, the portion of the assets
				  of any separate account which equal the reserves and other contract liabilities
				  of the account shall not be chargeable with liabilities arising out of any
				  other business of the company;
(3) The market-value adjustment formula, used
				  in determining nonforfeiture benefits, must be stated in the contract and must
				  be applicable for both upward and downward adjustments. When a contract is
				  filed, it must be accompanied by an actuarial statement indicating the basis
				  for the market-value adjustment formula and that the formula provides
				  reasonable equity to both the contract holder and the insurance
				  company.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.29 - Reserve Liabilities

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The reserve liabilities for modified guaranteed annuities
					 shall be established in accordance with actuarial procedures that
					 recognize:
(a) That assets of the
				  separate account are based on market values;
(b) The variable nature of benefits provided;
				  and
(c) Any mortality guarantees.
As a minimum, the separate account liability will equal the
					 surrender value based upon the market-value adjustment formula contained in the
					 contract. If that liability is greater than the market value of the assets, a
					 transfer of assets will be made into the separate account so that the market
					 value of the assets at least equals that of the liabilities. Also, any
					 additional reserve that is needed to cover future guaranteed benefits will also
					 be set up by the valuation actuary.
The market-value adjustment formula, the interest
					 guarantees, and the degree to which projected cash flow of assets and
					 liabilities are matched must also be considered. Each year, the valuation
					 actuary must provide an opinion on whether the assets in the separate account
					 are adequate to provide all future benefits that are
					 guaranteed.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.30 - Required Reports

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
Any insurer issuing individual modified guaranteed
					 annuities shall mail to the contractholder at least once in each contract year
					 at his or her last known address, a report showing both the account value and
					 the cash surrender value. The insurer shall not be required to mail such a
					 report during the first contract year. The report shall clearly indicate the
					 account value prior to the application of any surrender charges or market value
					 adjustment formula. It shall also specify the surrender charge and market value
					 adjustment used to determine the cash surrender value.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.31 - Foreign Insurers

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
If the law or regulation in the place of domicile of a
					 foreign insurer or the state of entry of a Canadian insurer provides a degree
					 of protection to the policyholders and the public which is substantially equal
					 to that provided by this article, the Commissioner, to the extent deemed
					 appropriate by him in his discretion, may consider compliance with such law or
					 regulation as compliance with this article.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.2 - Separate Account or Accounts-Modified Guaranteed Annuities › Section 2534.32 - Authorization of Agents

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
No person may act as an agent for a life insurer in the
					 transaction of modified guaranteed annuities unless and until he has received
					 from the Commissioner a license as a variable contract agent pursuant to
					 Article 16 (commending with Section
					 1758.1), Chapter 5, Part 2,
					 Division 1, of the Insurance Code.
1. New
					 section filed 2-6-92; operative 3-9-92 (Register 92, No.
					 13).
Note: Authority cited: Sections
						10506(h)
						and
						10506.3(a),
						Insurance Code. Reference: Sections
						10506(h),
						10506.3(a)
						and
						1758.1
						through
						1758.5,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.3 - Mutual Fund Investments in Variable Products › Section 2534.40 - Purpose

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The purpose of this article is to implement the provisions
					 of Insurance Code Section
					 10506,
					 subdivision (h) as amended by Assembly Bill 2778 (Calderon) (Statutes of 2002,
					 Chapter 347). Pursuant to the statute, these regulations supersede Insurance
					 Department Bulletin 97-2.
1. New
					 article 11.3 (sections
					 2534.40-2534.46) and section filed
					 12-13-2006; operative 1-12-2007 (Register 2006, No.
					 50).
Note: Authority cited: Section
						10506(h),
						Insurance Code. Reference: Section
						10506(h),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.3 - Mutual Fund Investments in Variable Products › Section 2534.41 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) For purposes of
				  this article, "Mutual Fund Investments" include but are not limited to,
				  investments that are registered with the Securities and Exchange Commission
				  pursuant to the Investment Company Act of 1940 (15 U.S.C. 80a-1).
				  Private placement investments involving non-mutual fund investments are
				  specifically excluded from this definition.
(b) Filings with the Commissioner, pursuant
				  to Section
				  2534.46 of this article, are
				  deemed to be notifications as delineated in Insurance Code Section
				  10506,
				  subdivision (h).
(c) For purposes
				  of this article, the terms "subaccounts" and "portfolios" are
				  interchangeable.
(d) For purposes
				  of this article, the term "variable product" is defined as any group or
				  individual variable life insurance policy or variable annuity contract as
				  described in Insurance Code Section
				  10506.
(e) For purposes of this article, the term
				  "hazardous operation" is defined as the issuance of any contract that may pose
				  a hazard to California policyholders or the public, that fails to adequately
				  disclose any material risk, or contains any of the factors delineated in
				  Section 2534.44 of this article.
1. New
					 section filed 12-13-2006; operative 1-12-2007 (Register 2006, No.
					 50).
Note: Authority cited: Section
						10506(h),
						Insurance Code. Reference: Section
						10506(h),
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 11.3 - Mutual Fund Investments in Variable Products › Section 2534.42 - Notifications and Procedures Concerning Hazardous Operations

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) Variable products may be reviewed to
				  determine if the investments involve hazardous operations.
(b) Hazardous operations shall not exist if
				  the variable product issued, or issued for delivery, in this state:
(1) has underlying investment portfolio(s)
				  that are registered under the Investment Company Act of 1940, regardless of
				  whether such underlying portfolio(s) meet the criteria set forth in Section
				  2534.45 of these
				  regulations;
(2) is issued in
				  connection with a plan that is subject to the fiduciary standards of the
				  Employee Retirement Income Security Act of 1974 (ERISA) or is issued in
				  connection with a welfare benefit, deferred compensation, pension, profit
				  sharing, or retirement plan established or maintained by or for a plan
				  sponsor;
(3) is a variable life
				  insurance contract issued under California Insurance Code Section
				  10506.3;
(4) is issued under California Insurance Code
				  Section
				  10541 to
				  entities such as a trust or foundation;
(5) or is issued only to "accredited
				  investors" as that term is defined in Section
				  501(a) of
				  Regulation D, promulgated under the Securities Act of 1933, (17 CFR Section
				  230.501(a)) or to "qualified
				  purchasers" as that term is defined in Section
				  2(a)(51)(A) of
				  the Investment Company Act of 1940, (15 USC §
												80a-2(a)(51)(A)).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2535 - Authority

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
These regulations are promulgated pursuant to the authority
					 granted to the Insurance Commissioner under the provisions of Section
					 790.10 of
					 the Insurance Code.
1. New
					 Article 12 (Sections
					 2535,
					 2535.1,
					 2535.2,
					 2536,
					 2536.1-2536.15,
					 2537,
					 2537.1) filed 5-12-72; effective
					 thirtieth day thereafter (Register 72, No. 20).
2. Repealer of
					 Article 12 and new Article 12 (Sections
					 2535,
					 2535.1-2535.3,
					 2536,
					 2536.1-2536.12,
					 2537.1,
					 2537.2) filed 4-2-73; effective
					 thirtieth day thereafter (Register 73, No. 14).
Note: Authority cited: Section
						790.10,
						Insurance Code. Reference: Section
						790.03,
						Insurance Code.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2535.1 - Purpose

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
The purpose of these regulations is to assure truthful and
					 adequate disclosure of all material and relevant information in the advertising
					 of disability insurance. This purpose is intended to be accomplished by the
					 establishment of, and adherence to, certain minimum standards and guidelines of
					 conduct in the advertising of disability insurance in a manner which prevents
					 unfair competition among insurers and is conducive to the accurate presentation
					 and description to the insurance buying public of a policy of such insurance
					 offered through various advertising media. Subdivisions (a), (b) and (c) of
					 Insurance Code Section
					 790.03
					 prohibit the transmitting or use of information in the form of advertisements
					 or otherwise in this State in such a manner or of such substance that the
					 insurance buying public may be deceived or misled. Since such sections of the
					 Insurance Code establish only general standards, these regulations establish
					 specific standards for advertisements relating to individual, group, blanket
					 and selected group (franchise) disability insurance. These regulations are
					 applicable to all persons and entities specified in Insurance Code Section
					 790.01
					 authorized to transact disability insurance in this State. The following
					 specific standards for advertisements of disability insurance are hereby
					 adopted.
GUIDELINE 2535.1
Disclosure is one of the principal objectives of these
					 regulations and this Section states specifically that the rules shall assure
					 "truthful and adequate disclosure of all material and relevant information."
					 These rules specifically prohibit some previous advertising
					 techniques.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2535.2 - Applicability

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) These
				  regulations shall apply to any disability insurance "advertisement," as that
				  term is hereinafter defined in Sections
				  2535.3(a), (g), (h) and
				  (i), unless otherwise specified in these
				  regulations, intended for presentation, distribution or dissemination in this
				  State when such presentation distribution or dissemination is made either
				  directly or indirectly by or on behalf of an insurer, agent, broker or
				  solicitor as those terms are defined in the Insurance Code of this State and
				  these regulations.
GUIDELINE 2635.2(a)
These regulations apply to any "advertisement" as that term
					 is defined in Sections
					 2535.3(a), (g), (h) and
					 (i), unless otherwise specified in these
					 regulations. These regulations apply to group and blanket as well as individual
					 accident and sickness insurance. Certain distinctions, however, are applicable
					 to these categories. Among them is the level of conversance with insurance, a
					 factor which is covered by Section
					 2536.1 of these
					 regulations.
(b) Every
				  insurer shall establish and at all times maintain a system of control over the
				  content, form and method of dissemination of all advertisements of its
				  policies. All such advertisements, regardless of by whom written, created,
				  designed or presented, shall be the responsibility of the insurer whose
				  policies are so advertised.
GUIDELINE 2535.2(b)
Advertising materials which are reproduced in quantity
					 shall be identified by form numbers or other identifying means in the case of
					 advertisements not subject to the requirements of Section
					 2536.9. Such identification shall
					 be sufficient to distinguish an advertisement from any other advertising
					 materials, policies, applications or other materials used by the
					 insurer.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2535.3 - Definitions

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) An
				  advertisement for the purpose of these regulations shall include:
(1) Printed and published material, audio
				  visual material, and descriptive literature of an insurer used in direct mail,
				  newspapers, magazines, radio scripts, TV scripts, billboards and similar
				  displays; and
(2) Descriptive
				  literature and sales aids of all kinds issued by an insurer, agent or broker
				  for presentation to members of the insurance buying public, including but not
				  limited to circulars, leaflets, booklets, depictions, illustrations, and form
				  letters; and
(3) Prepared sales
				  talks, presentations and material for use by agents, brokers and
				  solicitors.
GUIDELINE 2535.3(a)
The scope of the term "advertisement" extends to the use of
					 all media for communication to the general public (Section
					 2535.3(a)(1), to
					 the use of all media for communication to specific members of the general
					 public (Section
					 2535.3(a)(2) and
					 to the use of all media for communication by agents, brokers and
					 solicitors.
The definition of "advertisement" includes advertising
					 material included with a policy when the policy is delivered and material used
					 in the solicitation of renewals and reinstatements.
The definition of "advertisement" does not include:
(1) material to be used solely for the
				  training and education of an insurer's employees, agents or brokers;
(2) material in house organs of
				  insurers;
(3) communications within
				  an insurer's own organization not intended for dissemination to the
				  public;
(4) individual
				  communications of a personal nature with current policyholders other than
				  material urging such policyholders to increase or expand coverages;
(5) correspondence between a prospective
				  group or blanket policyholder and an insurer in the course of negotiating a
				  group or blanket contract;
(6)
				  court approved material ordered by a court to be disseminated to policyholders;
				  or
(7) a general announcement from
				  a group or blanket policyholder to eligible individuals on an employment or
				  membership list that a contract or program has been written or arranged;
				  provided, the announcement clearly indicates that it is preliminary to the
				  issuance of a booklet.
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536 - Method of Disclosure of Required Information

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
All information required to be disclosed by these
					 regulations shall be set out conspicuously and in close conjunction with the
					 statements to which such information relates or under appropriate captions of
					 such prominence that it shall not be minimized, rendered obscure or presented
					 in an ambiguous fashion or intermingled with the context of the advertisement
					 so as to be confusing or misleading.
GUIDELINE 2536
This Section permits the use of either of the following
					 alternative methods of disclosure:
(1)
				  The first alternative provides for the disclosure of exceptions, limitations,
				  reductions and other restrictions conspicuously and in close conjunction with
				  the statements to which such information relates. This may be accomplished by
				  disclosure in the description of the related benefits or in a paragraph set out
				  in close conjunction with the description of policy benefits.
(2) The second alternative provides for the
				  disclosure of exceptions, limitations, reductions and other restrictions not in
				  conjunction with the provisions describing policy benefits but under
				  appropriate captions of such prominence that the information shall not be
				  minimized, rendered obscure or otherwise made to appear unimportant. The phrase
				  "under appropriate captions" means that the title must be accurately
				  descriptive of the captioned material. Appropriate captions include the
				  following: "Exceptions," "Exclusions," "Conditions Not Covered" and "Exceptions
				  and Reductions." The use of captions such as, or similar to, the following are
				  not acceptable because they do not provide adequate notice of the significance
				  of the material: "Extent of Coverage," "Only these Exclusions" or "Minimum
				  Limitations."
In considering whether an advertisement complies with the
					 disclosure requirements of this Section, the Section must be applied in
					 conjunction with the form and content standards contained in Section
					 2536.1.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.1 - Form and Content of Advertisements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) The format and content of an
				  advertisement of a disability insurance policy shall be sufficiently complete
				  and clear to avoid deception or the capacity or tendency to mislead or deceive.
				  Whether an advertisement has a capacity or tendency to mislead or deceive shall
				  be determined by the Commissioner of Insurance from the overall impression that
				  the advertisement may be reasonably expected to create upon a person of average
				  education or intelligence, within the segment of the public to which it is
				  directed.
GUIDELINE 2536.1(a)
This Section must be applied in conjunction with Sections
					 2535.1 and
					 2536 of the regulations. This
					 Section refers specifically to "format and content" of the advertisement and
					 the "overall" impression created by the advertisement. This involves factors
					 such as, but not limited to, the size, color and prominence of type used to
					 describe benefits. The word "format" means the arrangement of the text and the
					 captions.
This rule requires distinctly different advertisements for
					 publication in newspapers or magazines of general circulation as compared to
					 scholarly, technical or business journals or newspapers. Where an advertisement
					 consists of more than one piece of material, each piece of material must,
					 independently of all other pieces of material, conform to the disclosure
					 requirements applicable to the appropriate form of advertisement as defined in
					 Section 2536.3(g) through
					 (i) of these regulations.
(b) Advertisements shall be truthful and not
				  misleading in fact or in implication. Words or phrases, the meaning of which is
				  clear only by implication or by familiarity with insurance terminology, shall
				  not be used.
GUIDELINE 2536.1(b)
The Section prohibits the use of incomplete statements and
					 words or phrases which have the tendency or capacity to mislead or deceive
					 because of the reader's unfamiliarity with insurance terminology. Therefore,
					 words, phrases and illustrations used in an advertisement must be clear and
					 unambiguous and, if the advertisement uses insurance terminology, sufficient
					 description of a word, phrase or illustration shall be provided by definition
					 or description in the context of the advertisement. As implied in Section
					 2536.1(a),
					 distinctly different levels of comprehension may be anticipated of the
					 subscribers of various publications.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.6 - Identification of Plan or Number of Policies

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) When a choice of the amount of benefits
				  is referred to, an advertisement which is an invitation to contract shall
				  disclose that the amount of benefits provided depends upon the plan selected
				  and that the premium will vary with the amount of the benefits
				  selected.
(b) When an advertisement
				  which is an invitation to contract refers to various benefits which may be
				  contained in two or more policies, other than group master policies, the
				  advertisement shall disclose that such benefits are provided only through a
				  combination of such policies.
GUIDELINE 2536.6
This Section imposes the same disclosure standards as
					 stated in Guideline 2536.2(b)(1). The comments in that Guideline are equally
					 applicable to this Section.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.7 - Disparaging Comparisons and Statements

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
An advertisement shall not directly or indirectly make
					 unfair or incomplete comparisons of policies or benefits or comparisons of
					 noncomparable policies of other insurers, and shall not disparage competitors,
					 their policies, services or business methods, and shall not disparage or
					 unfairly minimize competing methods of marketing insurance.
GUIDELINE 2536.7
This Section prohibits unfair or incomplete comparisons of
					 products, insurers or business methods. It specifically prohibits comparisons
					 of non-comparable policies and provides that advertisements shall not unfairly
					 minimize nor disparage competing types of insurance coverages or competing
					 methods of marketing insurance.
An advertisement should not contain statements such as "no
					 red tape" or "here is all you do to receive benefits."
Advertisements which state or imply that competing
					 insurance coverages customarily contain certain exceptions, reductions or
					 limitations not contained in the advertised policies are unacceptable unless
					 such exceptions, reductions or limitations are contained in a substantial
					 majority of such competing coverages.
Advertisements which state or imply that an insurer's
					 premiums are lower or that its loss ratios are higher because its
					 organizational structure differs from that of competing insurers are
					 unacceptable.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.8 - Jurisdictional Licensing and Status of Insurer

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a) An advertisement which is intended to be
				  seen or heard beyond the limits of the jurisdiction in which the insurer is
				  licensed shall not imply licensing beyond those limits.
GUIDELINE 2536.8(a)
This Subsection prohibits advertisements which imply that
					 an insurer is licensed beyond the limits of those jurisdictions where it is
					 actually licensed. An advertisement which contains testimonials from persons
					 who reside in a state in which the insurer is not licensed or which refers to
					 claims of persons residing in states in which the insurer is not licensed
					 implies licensing in those states and therefore is in violation of this rule
					 unless the advertisement states that the insurer is not licensed in those
					 states.
(b) An advertisement
				  shall not create the impression directly or indirectly that the insurer, its
				  financial condition or status, or the payment of its claims, or the merits,
				  desirability, or advisability of its policy forms or kinds or plans of
				  insurance are approved, endorsed, or accredited by any division or agency of
				  this State or the United States Government.
GUIDELINE 2536.8(b)
This Subsection prohibits advertisements implying that
					 approval, endorsement or accreditation of policy forms or advertising has been
					 granted by any division or agency of the state or federal governments.
					 "Approval" of either policy forms or advertising shall not be used by an
					 insurer to imply or state that a governmental agency has endorsed or
					 recommended the insurer, its policies, advertising or its financial
					 condition.
Although the Subsection permits a reference to an insurer
					 being licensed in a state where the advertisement appears, it does not allow
					 exaggeration of the fact of such licensing nor does it permit the suggestion
					 that competing insurers may not be so licensed because, in most states, an
					 insurer must be licensed in the state to which it directs its
					 advertising.
Terms such as "official," or words of similar import, used
					 to describe any policy or application form are not permissible because of the
					 potential for deceiving or misleading the public.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.10 - Group or Quasi-Group Implications

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
An advertisement of a particular policy shall not state or
					 imply that prospective insurers become group or quasi-group members covered
					 under a group policy and as such enjoy special rates or underwriting
					 privileges, unless such is the fact.
GUIDELINE 2536.10
This Section prohibits the use of representations to any
					 segment of the population that a particular policy or coverage is available
					 only to that or similar segments of the population as preferred risks when
					 actually such policy or coverage is available to members of the public at large
					 at the same rates. This rule prohibits an advertisement labeled "Now for
					 Readers of X Magazine."
This Section prohibits the solicitation of a particular
					 class, such as governmental employees, by use of advertisements which state or
					 imply that their occupational status entitles them to reduced rates on a group
					 or other basis when, in fact, the policy being advertised is sold only on an
					 individual basis at regular rates.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2536.12 - Statements About an Insurer

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
An advertisement shall not contain statements which are
					 untrue in fact, or by implication misleading, with respect to the assets,
					 corporate structure, financial standing, age or relative position of the
					 insurer in the insurance business. An advertisement shall not contain a
					 recommendation by any commercial rating system unless it clearly indicates the
					 purpose of the recommendation and the limitations of the scope and extent of
					 the recommendation.
GUIDELINE 2536.12
This Subsection is closely related to the requirements of
					 Section 2536.5 concerning the use of
					 statistics. The Subsection prohibits insurers which have been organized for
					 only a brief period of time advertising that they are "old" and also prohibits
					 the use of illustrations of a "home office" building in a manner which is
					 misleading with respect to the actual size and magnitude of the insurer. Also,
					 the occupations of the persons comprising the insurer's board of directors or
					 the public's familiarity with their names or reputations is irrelevant and must
					 not be emphasized. The preponderance of a particular occupation or profession
					 among the board of directors of an insurer does not justify the advertisement
					 of a plan of insurance offered to the general public as insurance designed or
					 recommended by members of that occupation or profession.
For example, it is unacceptable for an insurance company to
					 advertise a policy offered to the general public as "The Physicians' Policy" or
					 "The Doctors' Plan" simply because there is a preponderance of physicians or
					 doctors on the board of directors of the insurer. The rule prohibits the use of
					 a recommendation of a commercial rating system unless the purpose, meaning and
					 limitations of the recommendation are clearly indicated.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).
California Code of Regulations › Title 10 - Investment › Chapter 5 - Insurance Commissioner › Subchapter 3 - Insurers › Article 12 - Disability Insurance Advertisements › Section 2537 - Enforcement Procedures

Current through Register 2024 Notice Reg. No. 28, July 12, 2024
(a)
				  Advertising File: Each insurer shall maintain at its home or principal office a
				  complete file containing every printed, published or prepared advertisement of
				  its individual policies and typical printed, published or prepared
				  advertisements of its blanket, selected group (franchise) and group policies
				  hereafter disseminated in this or any other state whether or not licensed in
				  such other state, with a notation attached to each such advertisement which
				  shall indicate the manner and extent of distribution and the form number of any
				  policy advertised. Such file shall be subject to regular and periodical
				  inspection by this Department. All such advertisements shall be maintained in
				  said file for a period of either four years or until the filing of the next
				  regular report on examination of the insurer, whichever is the longer period of
				  time.
GUIDELINE 2537(a)
This Subsection is self-explanatory.
(b) Certificate of Compliance: Each insurer
				  required to file an Annual Statement which is now or which hereafter becomes
				  subject to the provisions of these regulations must file with this Department
				  with its Annual Statement a Certificate of Compliance executed by an authorized
				  officer of the insurer wherein it is stated that to the best of his knowledge,
				  information and belief the advertisements of disability insurance which were
				  disseminated by the insurer in this State during the preceding statement year
				  complied or were made to comply in all respects with the provisions of these
				  regulations and the Insurance Laws of this State as implemented and interpreted
				  by these regulations.
GUIDELINE 2537(b)
Insurers become subject to the requirements of this
					 Subsection by disseminating within this State advertisements of disability
					 insurance which are not exempted from these regulations.
1. Amendment
					 filed 11-29-74; effective thirtieth day thereafter (Register 74, No.
					 48).