# COMAR Title 31 — Maryland Insurance Administration

## Subtitle 15 — Unfair Trade Practices

### Chapter 02 — Advertisements of All Insurance Contracts Which Include Any Accident, Sickness, Hospital, Surgical or Medical Coverages

**Authority:** Insurance Article, §§2-109 and 27-203, Annotated Code of Maryland

**Administrative History:** Effective date: March 1, 1956

**Administrative History:** Amended effective May 1, 1968

**Administrative History:** Chapter recodified from COMAR 09.30.26 to COMAR 31.15.02 effective September 7, 1998 (25:18 Md. R. 1439)

**Administrative History:** Regulation .01B amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .06 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .07 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .11 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .12 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .15 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .17 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .17-1 adopted as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); adopted permanently effective November 25, 2013 (40:23 Md. R. 1936)

**Administrative History:** Regulation .18 amended as an emergency provision effective September 19, 2013 (40:21 Md. R. 1773); amended permanently effective November 25, 2013 (40:23 Md. R. 1936)

#### Regulation .01 Definitions.

*COMAR 31.15.02.01*

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

  (1) “Advertisement” includes:

    (a) Printed and published material and descriptive literature of a carrier used in or on newspapers, magazines, or any other publication, radio and TV scripts, matchbooks, blotters, calendars, posters, billboards, and similar displays;

    (b) Descriptive literature and sales aids of all kinds issued by a carrier for presentation to members of the public, including but not limited to circulars, pamphlets, leaflets, booklets, depictions, illustrations, and form letters; and

    (c) Prepared sales talks, presentations, and material for use by producers, and representations made by producers in accordance therewith.

  (2) “Carrier” includes an insurer, a nonprofit health service plan, a health maintenance organization, a dental plan organization, and any other person engaged in the business of insurance.

  (3) “Policy” includes any policy, plan, certificate, contract, agreement, statement of coverage, rider, or endorsement which provides accident or sickness benefits, or medical, surgical, dental, or hospital expense benefits, whether on a cash indemnity, reimbursement, or service basis, except:

    (a) When issued in connection with another kind of insurance other than life; and

    (b) Disability and double indemnity benefits included in life insurance and annuity contracts.

  (4) “Producer” has the meaning set forth in Insurance Article §1-101(u), Annotated Code of Maryland.

#### Regulation .02 Advertisement in General.

*COMAR 31.15.02.02*

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 may not be used.

#### Regulation .03 Advertisements of Benefits Payable, Losses Covered, or Premiums Payable.

*COMAR 31.15.02.03*

A. Deceptive Words, Phrases, or Illustrations. Words, phrases, or illustrations may not be used in a manner which misleads or has the tendency to deceive as to the extent of any policy benefit payable, loss covered, or premium payable. An advertisement relating to any policy benefit payable, loss covered, or premium payable shall be sufficiently complete and clear as to avoid deception or the tendency to deceive.

  (1) The words and phrases “all”, “full”, “complete”, “comprehensive”, “unlimited”, “up to”, “as high as”, “this policy will pay your hospital and surgical bills”, or “this policy will replace your income”, or similar words and phrases may not be used so as to exaggerate any benefit beyond the terms of the policy, but may be used only in such manner as fairly to describe the benefit.

  (2) A policy covering only one disease or a list of specified diseases may not be advertised so as to imply coverage beyond the terms of the policy. Synonymous terms may not be used to refer to any disease so as to imply broader coverage than is the fact.

  (3) The benefits of a policy which pays varying amounts for the same loss occurring under different conditions or which pays benefits only when a loss occurs under certain conditions may not be advertised without disclosing the limited conditions under which the benefits referred to are provided by the policy.

  (4) Phrases such as “this policy pays $1,800 for hospital room and board expenses” shall be considered incomplete unless the maximum daily benefit and the maximum time limit for hospital room and board expenses are indicated.

B. Exceptions, Reductions, and Limitations. When an advertisement refers to any dollar amount, period of time for which any benefit is payable, cost of policy, or specific policy benefit or the loss for which the benefit is payable, it shall disclose those exceptions, reductions, and limitations affecting the basic provisions of the policy without which the advertisement would have the tendency to mislead or deceive.

  (1) The term “exception” means any provision in a policy whereby coverage for a specified hazard is entirely eliminated. It is a statement of a risk not assumed under the policy.

  (2) The term “reduction” means any provision which reduces the amount of the benefit. A risk of loss is assumed but payment upon the occurrence of the loss is limited to some amount or period less than would be otherwise payable had the reduction clause not been used.

  (3) The term “limitation” means any provision which restricts coverage under the policy other than an exception or a reduction.

  (4) Waiting, Elimination, Probationary, or Similar Periods. When a policy contains a time period between the effective date of the policy and the effective date of coverage under the policy or a time period between the date a loss occurs and the date benefits begin to accrue for the loss, an advertisement covered by §B of this regulation shall disclose the existence of these periods.

  (5) Preexisting Conditions.

    (a) An advertisement covered by §B of this regulation shall disclose the extent to which any loss is not covered if the cause of the loss is traceable to a condition existing before the effective date of the policy.

    (b) When a policy does not cover losses traceable to preexisting conditions, an advertisement of the policy may not state or imply that the applicant's physical condition or medical history will not affect the issuance of the policy or payment of a claim under it. This limits the use of the phrase “no medical examination required” and phrases of similar import.

#### Regulation .04 Necessity for Disclosing Policy Provisions Relating to Renewability, Cancellability, and Termination.

*COMAR 31.15.02.04*

An advertisement which refers to renewability, cancellability, or termination of a policy, or which refers to a policy benefit, or which states or illustrates time or age in connection with eligibility of applicants or continuation of the policy, shall disclose the provisions relating to renewability, cancellability, and termination and any modification of benefits, losses covered, or premiums because of age or for other reasons, in a manner which does not minimize or render obscure the qualifying conditions.

#### Regulation .05 Method of Disclosure of Required Information.

*COMAR 31.15.02.05*

All information required to be disclosed by this chapter shall be set out conspicuously and in close conjunction with the statements to which the information relates or under appropriate captions of such prominence that it can 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.

#### Regulation .06 Testimonials.

*COMAR 31.15.02.06*

Testimonials used in advertisements shall be genuine, represent the current opinion of the author, be applicable to the policy advertised and be accurately reproduced. The carrier or producer, in using a testimonial, makes as its own all of the statements contained in the testimonial, and the advertisement including these statements is subject to all of the provisions of this chapter.

#### Regulation .07 Use of Statistics.

*COMAR 31.15.02.07*

An advertisement relating to the dollar amounts of claims paid, the number of persons insured, or similar statistical information relating to any carrier or policy may not be used unless it accurately reflects all of the relevant facts. The advertisement may not imply that the statistics are derived from the policy advertised unless that is the fact.

#### Regulation .08 Inspection of Policy.

*COMAR 31.15.02.08*

An offer in an advertisement of free inspection of a policy or offer of a premium refund is not a cure for misleading or deceptive statements contained in the advertisement.

#### Regulation .09 Identification of Plan or Number of Policies.

*COMAR 31.15.02.09*

A. When a choice of the amount of benefits is referred to, an advertisement 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.

B. When an advertisement refers to various benefits which may be contained in two or more policies, other than group master policies, the advertisement shall disclose that the benefits are provided only through a combination of the policies.

#### Regulation .10 Disparaging Comparisons and Statements.

*COMAR 31.15.02.10*

An advertisement may not directly or indirectly make unfair or incomplete comparisons of policies or benefits or otherwise falsely disparage competitors, their policies, services, or business methods.

#### Regulation .11 Jurisdictional Licensing.

*COMAR 31.15.02.11*

A. An advertisement which is intended to be seen or heard beyond the limits of the jurisdiction in which the carrier or producer is licensed may not imply licensing beyond those limits.

B. Advertisements by direct mail carriers or producers shall indicate that the carrier or producer is licensed in a specified state or states only, or is not licensed in a specific state or states, by use of some language such as “This Company is licensed only in State A” or “This Company is not licensed in State B”.

#### Regulation .12 Identity of Carrier or Producer.

*COMAR 31.15.02.12*

The identity of the carrier or producer shall be made clear in all of its advertisements. An advertisement may not use a trade name, service mark, slogan, symbol, or other device which has the tendency to mislead or deceive as to the true identity of the carrier or producer.

#### Regulation .13 Group or Quasi-Group Implications.

*COMAR 31.15.02.13*

An advertisement of a particular policy may not state or imply that prospective policyholders become group or quasi-group members and as such enjoy special rates or underwriting privileges unless that is the fact.

#### Regulation .14 Introductory, Initial, or Special Offers.

*COMAR 31.15.02.14*

An advertisement may not state or imply that a particular policy or combination of policies is an introductory, initial, or special offer and that the applicant will receive advantages by accepting the offer, unless that is the fact.

#### Regulation .15 Approval or Endorsement by Third Parties.

*COMAR 31.15.02.15*

A. An advertisement may not state or imply that a carrier or a policy has been approved or a carrier’s financial condition has been examined and found to be satisfactory by a governmental agency.

B. An advertisement may not state or imply that a carrier or a policy has been approved or endorsed by any individual, group of individuals, society, association, or other organization, unless that is the fact.

#### Regulation .16 Service Facilities.

*COMAR 31.15.02.16*

An advertisement may not contain untrue statements with respect to the time within which claims are paid or statements which imply that claim settlements will be liberal or generous beyond the terms of the policy.

#### Regulation .17 Statements About a Carrier.

*COMAR 31.15.02.17*

An advertisement may not contain statements which are untrue in fact or by implication misleading with respect to the carrier's assets, corporate structure, financial standing, age, or relative position in the insurance business.

#### Regulation .17-1 Discouraging Enrollment.

*COMAR 31.15.02.17-1*

A carrier or producer may not employ an advertisement that will have the effect of discouraging the enrollment of individuals with significant health needs in health insurance coverage.

#### Regulation .18 Special Enforcement Procedures.

*COMAR 31.15.02.18*

A. Advertising File. Each carrier or producer shall maintain at its home or principal office a complete file containing every printed, published, or prepared advertisement of individual policies and typical printed, published, or prepared advertisements of blanket, franchise, and group policies hereafter disseminated in this or any other state whether or not licensed in the other state, with a notation attached to each advertisement which shall indicate the manner and extent of distribution and the form number of any policy advertised. The file shall be subject to regular and periodical inspection by the Commissioner. These advertisements shall be maintained in this file for a period of not less than 3 years.

B. Certificate of Compliance. Each carrier or producer required to file an annual statement which is now or which hereafter becomes subject to the provisions of this chapter shall file with the Commissioner together with its annual statement, a certificate executed by an authorized officer of the carrier or producer in which it is stated that to the best of the officer's knowledge, information, and belief the advertisements which were disseminated by the carrier or producer during the preceding statement year complied or were made to comply in all respects with the provisions of the Insurance Laws of Maryland and the regulations issued thereunder by the State Insurance Commissioner.

C. The chief executive officer of each carrier or producer to which this chapter is addressed, shall acknowledge its receipt and indicate the carrier’s or producer’s intention to comply.