[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
