[Federal Register Volume 60, Number 152 (Tuesday, August 8, 1995)]
[Rules and Regulations]
[Pages 40262-40263]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 95-19541]



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FEDERAL TRADE COMMISSION

16 CFR Part 234


Guides for the Mail Order Insurance Industry

AGENCY: Federal Trade Commission.

ACTION: Elimination of guides.

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SUMMARY: The Guides for the Mail Order Insurance Industry were adopted 
in 1964 to prevent deception of purchasers of insurance and maintenance 
of fair competition by out-of-state mail order sellers of insurance. 
Since issuance of the Guides, state insurance laws have changed 
significantly. The states, through their licensing powers, now regulate 
out-of-state mail order sellers of insurance. Those regulations cover 
most, if not all, of the substantive areas addressed by the Guides. 
These facts appear to make the Guides unnecessary. Because of these 
changed circumstances, the Commission has determined that it is in the 
public interest to eliminate the Guides for the Mail Order Insurance 
Industry. The Commission further has determined that, because the 
reasons to revoke the Guides are ample and not in controversy, it is 
unnecessary to seek comment. This action is not to be understood as a 
statement that the principles announced in the Guides do not reflect 
the requirements of Section 5 of the Federal Trade Commission Act, 15 
U.S.C. 45.

EFFECTIVE DATE: August 8, 1995.

ADDRESSES: Requests for copies of this notice should be sent to the 
Public Reference Branch, Room 130, Federal Trade Commission, 
Washington, DC 20580.

FOR FURTHER INFORMATION CONTACT:
Matthew Daynard or Walter Gross, Division of Service Industry 
Practices, Bureau of Consumer Protection, Federal Trade Commission, 
Washington, DC 20580, (202) 326-3291 or (202) 326-3319.

SUPPLEMENTARY INFORMATION: The Guides for the Mail Order Insurance 
Industry were issued on May 15, 1964.\1\ Designed to prevent deception 
and the maintenance of fair competition in the out-of-state mail order 
insurance industry, the Guides prohibit several forms of potential 
misrepresentation in advertising concerning the benefits, conditions, 
terms, identity, and claims paid for any insurance policy; the 
identity, standing in the industry, or financial condition of the 
insurer, and the disparagement of competitors or competitors' policies, 
services, or business methods.

    \1\ 29 FR 6381 (1964).
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    As a part of its periodic review of the regulatory and economic 
impact of the Commission's rules and guides, the Commission reviewed 
the current status of state laws regulating mail order insurance 
sellers to determine whether there was a need to retain or remove the 
Guides. That review indicates that state insurance laws have changed 
substantially since the Guides were adopted in 1964.
    All states have enacted some version of the model Unfair Trade 
Practices Act for insurance (National Ass'n of Insurance 
Commissioners). Those laws cover most, if not all, of the substantive 
areas covered by the Guides. In addition, at least 49 states have 
adopted the Nonadmitted Insurance Act (1983) (National Ass'n of 
Insurance Commissioners), or similar legislation, which: (1) Provides 
that no insurer shall transact business in the state, whether by mail 
or otherwise, without first obtaining a license; and (2) authorizes the 
state regulatory authority to require compliance with all state 
insurance laws as a condition of licensing. If licensing requirements, 
including compliance with the state's Unfair Trade Practices Act, are 
not met, the state can suspend or revoke the license.
    These changes in state insurance laws appear to make the Guides' 
provisions unnecessary. Accordingly, the Commission has determined that 
it is in the public interest to eliminate the Guides.

List of Subjects in 16 CFR Part 234

    Advertising, Insurance, Postal Service, Trade practices.

PART 234--[REMOVED]

    The Commission, under authority of sections 5 (a)(1) and 6(g) of 
the Federal Trade Commission Act, 15 U.S.C. 45(a)(1) and 46(g), amends 
chapter I of title 16 of the Code of Federal Regulations by removing 
Part 234.

    By direction of the Commission.
Donald S. Clark,
Secretary.
Statement of Commissioner Mary L. Azcuenaga Concurring in 16 CFR Part 
14, Matter No. P954215; Repeal of Mail Order Insurance Guides, Matter 
No. P954903; Repeal of Guides Re: Debt Collection, Matter No. P954809; 
and Free Film Guide Review, Matter No. P959101

    In a flurry of deregulation, the Commission today repeals or 
substantially revises several Commission guides and other 
interpretive rules.\1\ The Commission does so without seeking public 
comment. I have long supported the general goal of repealing or 
revising unnecessary, outdated, or unduly burdensome legislative and 
interpretive rules, and I agree that the repeal or revision of these 
particular guides and interpretive rules appears reasonable. 
Nevertheless, I cannot agree with the Commission's decision not to 
seek public comment before making these changes.

    \1\ Administrative Interpretations, General Policy Statements, 
and Enforcement Policy Statements, 16 C.F.R. Part 14; Guides for the 
Mail Order Insurance Industry, 16 C.F.R. Part 234; Guides Against 
Debt Collection Deception, 16 C.F.R. Part 237; and Guide Against 
Deceptive Use of the Word ``Free'' In Connection With the Sale of 
Photographic Film and Film Processing Services, 16 C.F.R. Part 242.
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    Although it is not required to do so under the Administrative 
Procedure Act, 5 U.S.C. 553(b)(A), the Commission traditionally has 
sought public comment before issuing, revising, or repealing its 
guides and other interpretive rules. More specifically, the 
Commission adopted a policy in 1992 of reviewing each of its guides 
at least once every ten years and issuing a request for public 
comment as part of this review. See FTC Operating Manual ch. 8.3.8. 
The Commission decided to seek public comment on issues such as:
    (1) The economic impact of and continuing need for the guide; 
(2) changes that should be made in the guide to minimize any adverse 
economic effect; (3) any possible conflict between the guide and any 
federal, state, or local laws; and (4) the effect on the guide of 
technological, economic, or other industry changes, if any, since 
the guide was promulgated.

Id. The Commission has sought public comment and has posed these 
questions concerning a number of guides since adopting its 
procedures for regulatory review in 1992.\2\

    \2\ See, e.g., Request for Comments Concerning Guides for the 
Hosiery Industry, 59 FR 18004 (Apr. 15, 1994); Request for Comment 
Concerning Guides for the Feather and Down Products Industry, 59 FR 
18006 (Apr. 15, 1994).
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    Notwithstanding its long-standing, general practice of seeking 
public comment and its 

[[Page 40263]]
specific policy of seeking public comment as part of its regulatory 
review process, the Commission has chosen not to seek public comment 
before repealing or revising these guides and interpretive rules. 
Why not? Has the Commission changed its view about the potential 
value of public comment? Perhaps the Commission knows all the 
answers, but then again, perhaps not. Although reasonable arguments 
can be made for repeal or revision of these guides and interpretive 
rules, public comment still might prove to be beneficial.
    In addition, the relatively short period of time that would be 
required for public comment should not be problematic. The 
Commission has not addressed any of these guides or interpretive 
rules in the last ten years. Indeed, it has not addressed some of 
them for thirty years or more. For example, the Commission 
apparently has not addressed the interpretive rule concerning the 
use of the word ``tile'' in designation of non-ceramic products 
since it was issued in 1950.\3\ The continued existence of these 
guides and interpretive rules during a brief public comment period 
surely would cause no harm because they are not binding and because, 
arguably, they are obsolete. I seriously question the need to act so 
precipitously as to preclude the opportunity for public comment.\4\

    \3\ 16 C.F.R. 14.2.
    \4\ Unfortunately, seeking public comment would not permit the 
Commission to count the repeal and revision of these guides and 
interpretive rules in its tally of completed actions in the 
Regulatory Reinvention Initiative Report that will be sent to the 
President on August 1, 1995, but perhaps that harm could be 
mitigated by reporting to the President that the Commission is 
seeking public comment concerning repeal or revision.
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    In 1992, the Commission announced a careful, measured approach 
for reviewing its guides and interpretive rules, and public comment 
has been an important part of that process. Incorporating public 
comment into the review is appropriate and sensible. Although I have 
voted in favor of repealing or revising these guides and 
interpretive rules, I strongly would have preferred that the 
Commission seek public comment before doing so.

[FR Doc. 95-19541 Filed 8-7-95; 8:45 am]
BILLING CODE 6750-01-M