14VAC5-43 Rules Governing Use of Senior-Specific Certifications and Professional Designations in Sale of Life or Accident and Sickness Insurance or Annuities

REGULATIONS

Vol. 25 Iss. 19 - May 25, 2009

TITLE 14. INSURANCE

STATE CORPORATION COMMISSION

Chapter 43

Final Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Title of Regulation: 14VAC5-43. Rules Governing Use of Senior-Specific Certifications and Professional Designations in Sale of Life or Accident and Sickness Insurance or Annuities (adding 14VAC5-43-10, 14VAC5-43-20, 14VAC5-43-30).

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

Effective Date: May 15, 2009.

Agency Contact: Scott White, Associate General Counsel, State Corporation Commission, Office of General Counsel, 1300 East Main Street, P.O. Box 1197, Richmond, VA 23218, telephone [phone], FAX [phone], or email [e-mail].

Summary:

The regulation is based on a National Association of Insurance Commissioners Model Regulation and sets forth standards to protect consumers from misleading and fraudulent marketing practices with respect to the use of senior-specific certifications and designations in the sale or purchase of, or advice made in connection with, a life or accident and sickness insurance or annuity product. There were no changes from the proposed version of the regulation.

AT RICHMOND, APRIL 23, 2009

COMMONWEALTH OF VIRGINIA

At the relation of the

STATE CORPORATION COMMISSION

CASE NO. INS-2008-00267

Ex Parte: In the matter of Adopting
Rules Governing Use of Senior-Specific
Certifications and Professional Designations
In the Sale of Life or Accident and Sickness
Insurance or Annuities

ORDER ADOPTING RULES

By Order to Take Notice ("Order") entered herein February 24, 2009, all interested persons were ordered to take notice that subsequent to April 15, 2009, the State Corporation Commission ("Commission") would consider the entry of an order adopting proposed new rules by the Bureau of Insurance ("Bureau") entitled "Rules Governing Use of Senior-Specific Certifications and Professional Designations in the Sale of Life or Accident Sickness Insurance or Annuities," which are to be published in Chapter 43 of Title 14 of the Virginia Administrative Code as rules at 14 VAC 5-43-10 through 14 VAC 5-43-30, unless on or before April 15, 2009, any person objecting to the adoption of the proposed new 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 proposed new rules on or before April 15, 2009.

No request for hearing was filed with the Clerk. Comments were filed on April 17, 2009, by the American Council of Life Insurers ("ACLI"). The ACLI supported adoption of the proposed new rules because they closely track the NAIC Model regulation and therefore help foster a consistent approach among the states in addressing this particular issue.¹

THE COMMISSION, having considered the proposed new rules and the comments filed, is of the opinion that the attached proposed new rules should be adopted.

THEREFORE IT IS ORDERED THAT:

(1) The proposed new rules entitled "Rules Governing Use of Senior-Specific Certifications and Professional Designations in Sale of Life or Accident Sickness Insurance or Annuities,"² which are to be published in Chapter 43 of Title 14 of the Virginia Administrative Code as rules at 14 VAC 5-43-10 through 14 VAC 5-43-30, and which are attached hereto and made a part hereof, should be, and they are hereby, ADOPTED to be effective May 15, 2009.

(2) AN ATTESTED COPY hereof, shall be sent by the Clerk of the Commission to the Bureau in care of Deputy Commissioner Brian P. Gaudiose, who forthwith shall give further notice of the adoption of the new rules by mailing a copy of this Order, including a clean copy of the attached final new rules, to all insurers licensed by the Commission to sell accident and sickness insurance, life insurance, variable life insurance, annuities, or variable annuities in Virginia, as well as all interested parties.

(3) The Commission's Division of Information Resources forthwith shall cause a copy of this Order, including a copy of the attached new rules, to be forwarded to the Virginia Registrar of Regulations for appropriate publication in the Virginia Register of Regulations and shall make this Order and the attached new rules available on the Commission's website, www.scc.virginia.gov/case.

(4) The Bureau of Insurance shall file with the Clerk of the Commission an affidavit of compliance with the notice requirements of paragraph (2) of this Order.

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¹ The Bureau considered these comments even though they were not timely filed.
² The word "the" that preceded the word "Sale" in the original title was dropped by the Virginia Register because of character length restrictions.

CHAPTER 43
RULES GOVERNING USE OF SENIOR-SPECIFIC CERTIFICATIONS AND PROFESSIONAL DESIGNATIONS IN SALE OF LIFE OR ACCIDENT AND SICKNESS INSURANCE OR ANNUITIES

14VAC5-43-10. Applicability.

A. The purpose of this chapter is to set forth standards to protect consumers from misleading and fraudulent trade practices with respect to the use of senior-specific certifications and professional designations in the marketing, solicitation, sale or purchase of, or advice made in connection with, a life or accident and sickness insurance or an annuity product.

B. This chapter shall apply to any marketing, solicitation, sale or purchase of, or advice made in connection with, a life or accident and sickness insurance policy or annuity product by an insurance agent, whether issued on an individual or group basis. This includes, but is not limited to, fixed and variable annuities, long-term care insurance, including long-term partnership plans, Medicare Supplement, Medicare Part C, and Medicare Part D.

14VAC5-43-20. Senior-specific certifications and professional designations.

A. No insurance agent shall use a senior-specific certification or professional designation that indicates or implies in such a way as to mislead a purchaser or prospective purchaser that the insurance agent has special certification or training in advertising or servicing seniors in connection with the marketing, solicitation, sale or purchase of a life or accident and sickness insurance policy or annuity product, or in the provision of advice as to the value of or the advisability of purchasing or selling a life or accident and sickness insurance policy or annuity product, either directly or indirectly through publications or writings, or by issuing or promulgating analyses or reports related to a life or accident and sickness insurance policy or annuity product.

B. The prohibited use of senior-specific certifications or professional designations includes, but is not limited to, the following:

1. Use of a certification or professional designation by an insurance agent who has not actually earned or is otherwise ineligible to use such certification or designation;

2. Use of a nonexistent or self-conferred certification or professional designation;

3. Use of a certification or professional designation that indicates or implies a level of occupational qualifications obtained through education, training or experience that the insurance agent using the certification or designation does not have; and

4. Use of a certification or professional designation that was obtained from a certifying or designating organization that:

a. Is primarily engaged in the business of instruction in sales or marketing;

b. Does not have reasonable standards or procedures for assuring the competency of its certificants or designees;

c. Does not have reasonable standards or procedures for monitoring and disciplining its certificants or designees for improper or unethical conduct; or

d. Does not have reasonable continuing education requirements for its certificants or designees in order to maintain the certificate or designation.

C. There is a rebuttable presumption that a certifying or designating organization is not disqualified solely for purposes of subdivision B 4 of this section when the certification or designation issued from the organization does not primarily apply to sales or marketing and when the organization or the certification or designation in question has been accredited by: (i) the American National Standards Institute (ANSI); (ii) the National Commission for Certifying Agencies; or (iii) any organization that is on the United States Department of Education's list entitled "Accrediting Agencies Recognized for Title IV Purposes."

D. In determining whether a combination of words or an acronym standing for a combination of words constitutes a certification or professional designation indicating or implying that a person has special certification or training in advising or servicing seniors, factors to be considered shall include:

1. Use of one or more words such as "senior," "retirement," "elder," or like words combined with one or more words such as "certified," "registered," "chartered," "advisor," "specialist," "consultant," "planner," or like words, in the name of the certification or professional designation; and

2. The manner in which those words are combined.

E. For purposes of this section, a job title within an organization that is licensed or registered by a state or federal financial services regulatory agency is not a certification or professional designation, unless it is used in a manner that would confuse or mislead a reasonable consumer, when the job title: (i) indicates seniority or standing within the organization; or (ii) specifies an individual's area of specialization within the organization.

For purposes of this subsection, financial services regulatory agency includes, but is not limited to, an agency that regulates insurers, insurance producers, broker-dealers, investment advisers, or investment companies as defined under the Investment Company Act of 1940 (15 USC § 80).

14VAC5-43-30. Severability.

If any section or a portion of this chapter, or the applicability thereof to any person or circumstance is held to be invalid by a court, the remainder of this chapter, or the applicability of such provisions to other persons shall not be affected thereby.

VA.R. Doc. No. R09-1799; Filed April 24, 2009, 12:11 p.m.