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31 Pa. Code § 89a.120. Standards for marketing.

§ 89a.120. Standards for marketing.

 (a)  Every insurer, health care service plan or other entity marketing long-term care insurance coverage in this Commonwealth, directly or through its producers, shall:

   (1)  Establish marketing procedures and producer training requirements to assure that marketing activities, including a comparison of policies, by its producers will be fair and accurate and excessive insurance is not sold or issued.

   (2)  Display prominently by type, stamp or other appropriate means, on the first page of the outline of coverage and policy the following:

  ‘‘Notice to buyer: This policy may not cover all of the costs associated with long-term care incurred by the buyer during the period of coverage. The buyer is advised to review carefully all policy limitations.’’

   (3)  Provide copies of the disclosure forms required in §  89a.108(c) (Appendices B and F) (relating to long term care insurance personal worksheet; and rate information) to the applicant.

   (4)  Inquire and otherwise make every reasonable effort to identify whether a prospective applicant or enrollee for long-term care insurance already has accident and sickness or long-term care insurance and the types and amounts of insurance, except that in the case of qualified long-term care insurance contracts, an inquiry into whether a prospective applicant or enrollee for long-term care insurance has accident and sickness insurance is not required.

   (5)  Every insurer or entity marketing long-term care insurance shall establish auditable procedures for verifying compliance with this subsection.

   (6)  Provide written notice to the prospective policyholder or certificateholder at solicitation that a senior insurance counseling program approved by the Commonwealth is available and the name, address and telephone number of the program.

   (7)  For long-term care health insurance policies and certificates, use the terms “noncancellable” or “level premium” only when the policy or certificate conforms to §  89a.105(a)(3) (relating to policy practices and provisions).

   (8)  Provide an explanation of contingent benefit upon lapse provided for in §  89a.123(d)(3) (relating to nonforfeiture benefit requirement).

 (b)  The following acts and practices are prohibited:

   (1)  Twisting. Knowingly making misleading representation or fraudulent comparison of insurance policies or insurers for the purpose of inducing, or tending to induce, a person to lapse, forfeit, surrender, terminate, retain, pledge, assign, borrow on or convert an insurance policy or to take out a policy of insurance with another insurer.

   (2)  High pressure tactics. Employing a method of marketing having the effect of or tending to induce the purchase of insurance through force, fright, threat, whether explicit or implied, or undue pressure to purchase or recommend the purchase of insurance.

   (3)  Cold lead advertising. Making use directly or indirectly of a method of marketing which fails to disclose in a conspicuous manner that a purpose of the method of marketing is solicitation of insurance and that contact will be made by an insurance producer or insurance company.

   (4)  Misrepresentation. Misrepresenting a material fact in selling or offering to sell a long-term care insurance policy.

   (5)  Other prohibited practices. Other practices prohibited by the Unfair Insurance Practices Act (40 P. S. § §  1171.1—1171.15).

 (c)  With respect to the obligations in this subsection, the primary responsibility of an association, as defined in paragraph (2) of the ‘‘group long-term care insurance’’ definition in section 1103 of the act (40 P. S. §  991.1103), when endorsing or selling long-term care insurance shall be to educate its members concerning long-term care issues in general so that its members can make informed decisions.

   (1)  Associations shall provide objective information regarding long-term care insurance policies or certificates endorsed or sold by the associations to ensure that members of the associations receive a balanced and complete explanation of the features in the policies or certificates that are being endorsed or sold.

   (2)  The insurer shall file with the Department the following material:

     (i)   The policy and certificate.

     (ii)   A corresponding outline of coverage.

     (iii)   Advertisements requested by the Department.

   (3)  The association shall disclose the following in a long-term care insurance solicitation:

     (i)   The specific nature and amount of the compensation arrangements (including the fees, commissions, administrative fees and other forms of financial support) that the association receives from endorsement or sale of the policy or certificate to its members.

     (ii)   A brief description of the process under which the policies and the insurer issuing the policies were selected.

   (4)  If the association and the insurer have interlocking directorates or trustee arrangements, the association shall disclose that fact to its members.

   (5)  The board of directors of associations selling or endorsing long-term care insurance policies or certificates shall review and approve the insurance policies as well as the compensation arrangements made with the insurer or producer.

   (6)  The association shall do the following except that this does not apply to qualified long-term care insurance contracts:

     (i)   At the time of the association’s decision to endorse, engage the services of a person with expertise in long-term care insurance not affiliated with the insurer to conduct an examination of the policies, including its benefits, features, and rates and update the examination thereafter in the event of material change.

     (ii)   Actively monitor the marketing efforts of the insurer and its agents.

     (iii)   Review and approve all marketing materials or insurance communications used to promote sales or sent to members regarding the policies or certificates.

   (7)  Group long-term care insurance policies or certificates may not be issued to an association unless the insurer files with the Department the information required in this subsection.

   (8)  The insurer may not issue a long-term care policy or certificate to an association or continue to market that policy or certificate unless the insurer certifies annually that the association has complied with this subsection.

   (9)  Failure to comply with the filing and certification requirements of this section constitutes an unfair trade practice in violation of the Unfair Insurance Practices Act.

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