Title of Regulation: 14VAC5-41. Rules Governing Advertisement of Life Insurance and Annuities (amending 14VAC5-41-80).

Statutory Authority: §§ 12.1-13 and 38.2-223 of the Code of Virginia.

Effective Date: September 1, 2022.

Agency Contact: Jackie Myers, Chief Insurance Market Examiner, Bureau of Insurance, State Corporation Commission, P.O. Box 1157, Richmond, VA 23218, telephone (804) 3719630, or email jackie.myers@scc.virginia.gov.

Summary:

The amendments align the regulation with guidance prepared by the National Association of Insurance Commissioners in its Advertisements of Life Insurance and Annuities Model Regulation regarding the use of the terms "inexpensive" and "low cost" and other similar terms used to describe policies that may mislead consumers.

AT RICHMOND, MAY 12, 2022

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. INS-2022-00023

Ex Parte: In the matter of Amending

Rules Governing Advertisement of

Life Insurance and Annuities

ORDER ADOPTING RULES

By Order to Take Notice ("Order") entered March 7, 2022, all carriers licensed in the Commonwealth of Virginia to write life insurance, annuities or variable annuities and all interested persons were ordered to take notice that subsequent to April 29, 2022, the State Corporation Commission ("Commission") would consider the entry of an order adopting amendments to rules in Chapter 41 of Title 14 of the Virginia Administrative Code, entitled "Rules Governing Advertisement of Life Insurance and Annuities" ("Rules"), as set out at 14 VAC 5-41-80, unless on or before April 29, 2022, any person objecting to the adoption of the amendments to the Rules filed a request for hearing with the Clerk of the Commission ("Clerk").

The Order also required all interested persons to file their comments in support of or in opposition to the amendments to the Rules with the Clerk on or before April 29, 2022.

Following the Commission's entry of the Order, the Bureau of Insurance ("Bureau") received only one comment to the proposed amendment to the Rules.¹ The Bureau responded directly to the commenter by letter and has filed that response as part of the record. No one filed a request for a hearing with the Clerk.

The amendments to the Rules are necessary to address the Bureau's concerns with the use of the phrases "inexpensive," "low cost," and similar terms in advertisements for life insurance policies and annuity contracts on an industry-wide basis in Virginia, and to more closely align the Rules with guidance prepared by the National Association of Insurance Commissioners in its Advertisements of Life Insurance and Annuities Model Regulation, which addresses the use of these terms.

The Bureau has recommended to the Commission that the amendments to the Rules be adopted.

NOW THE COMMISSION, having considered the proposal to amend the Rules, the comment and the Bureau's response thereto, and the recommendation of the Bureau to adopt the amendments to the Rules, is of the opinion that the attached amendments to the Rules should be adopted, effective September 1, 2022.

Accordingly, IT IS ORDERED THAT:

(1) The amendments to the "Rules Governing Advertisement of Life Insurance and Annuities," as set out at 14 VAC 5-41-80 of the Virginia Administrative Code, which are attached hereto and made part hereof, are hereby ADOPTED effective September 1, 2022.

(2)The Bureau shall provide notice of the adopted amendments to the Rules to all carriers licensed in Virginia to write life insurance, annuities or variable annuities and to interested persons.

(3)The Commission's Office of General Counsel shall cause a copy of this Order and the amendments to the Rules to be forwarded to the Virginia Registrar of Regulations for appropriate publication in the Virginia Register of Regulations.

(4)The Commission's Division of Information Resources shall make available this Order and the attached amendments to the Rules on the Commission's website: scc.virginia.gov/pages/Case-Information.

(5)The Bureau shall file with the Clerk of the Commission a certificate of compliance with the notice requirements of Ordering Paragraph (2) above.

(6)This case is dismissed.

A COPY hereof shall be sent electronically by the Clerk of the Commission to:

C. Meade Browder, Jr., Senior Assistant Attorney General, at mbrowder@oag.state.va.us, Office of the Attorney General, Division of Consumer Counsel, 202 N. 9th Street, 8th Floor, Richmond, Virginia 23219-3424; and a copy hereof shall be delivered to the Commission's Office of General Counsel and to the Bureau of Insurance in care of Deputy Commissioner Julie S. Blauvelt.

_____________________________

¹The Bureau forwarded this comment to the Clerk for entry in the case record.

14VAC5-41-80. Policy costs and cost comparisons.

A. The words "free," "no cost," "without cost," "no additional cost," "at no extra cost," or words of similar import shall not be used with respect to any benefit or service being made available with a policy unless true. If there is no charge to the insured, then the identity of the payor and the amount of the payment shall be prominently disclosed. An advertisement may specify the charge for a benefit or a service or may state that a charge is included in the premium or use other appropriate language.

B. An advertisement of for a particular policy marketed by direct response techniques or a life insurance policy containing graded or modified benefits shall not use the phrase "affordable," "inexpensive," "low cost," or any similar term unless that fact is capable of being demonstrated to the satisfaction of the commission phrase or word of similar import when the policy being advertised is guaranteed issue.

C. An advertisement shall not imply or state that all older policies are more or less costly than newer policies.

D. An advertisement of two or more policies sold as a "package" or other combination shall not direct attention improperly at the cost competitiveness of one part of the "package" when the cost competitiveness of that part is not indicative of the cost competitiveness of the "package" as a whole.

E. An advertisement of a single policy shall not direct attention improperly at the cost competitiveness of a part of the policy when the cost competitiveness of that part is not indicative of the cost competitiveness of the entire policy.

F. An advertisement of a policy at a particular issue age, sex, or amount shall not lead prospective policyholders to believe that the cost competitiveness of the policy is similar at other issue ages, sex, or amounts unless that is a fact.

G. An advertisement containing a cost comparison of two or more policies with nonguaranteed policy elements in which the method of investment income allocation differs between or among the policies shall state that fact and shall contain a brief explanation of the implications of the cost comparison.