“Puffery” is a legal term referring to promotional claims that express subjective rather than objective views. An example would be an advertisement declaring that amber-colored beer is crisp and clear.
Puffery provides a legal protection for companies’ claims so long as a reasonable person would not take the statement literally. This legal technicality is critical to advertising.
Why, then, are insurance regulations seemingly vacant of this protection?
All insurance jurisdictions have unfair and deceptive trade practice laws which prohibit an insurance product from being sold through misleading or deceptive means. Producers consistently ask for clarification or examples of what regulators consider “misleading” or “deceptive” when it comes to advertising insurance products and their services.
Recently, the insurance industry has taken issue with certain designations used by producers claiming such may mislead a consumer, especially a senior, to believe the insurance producer is engaged in a business other than the sale of insurance.
Example: It may be deemed misleading or deceptive if someone uses a designation to promote that they specialize in working with seniors, but does not make clear that the true nature of their relationship is based on selling insurance.
Another example: A regulatory action was brought in Texas against an agent who advertised his senior advocacy organization. Not only had the organization been administratively dissolved by the Texas Secretary of State for failure to file an annual report, it was also viewed as a guise for the insurance producer to sell products. Regulators determined the use of such an organization was misleading and deceptive to the public.
In California, regulators cited an insurance producer for using a senior designation and calling himself an “estate planner,” although he was not a licensed attorney. The complaint noted that most people assume that professionals providing estate planning services are lawyers. The insurance producer in this case was seen as making a misleading implication that he was an attorney. Again, the true nature of the producer’s business, selling insurance, was not clear from the face of the advertisement.
Notably, California now requires all insurance producers to clearly state their California insurance license number on all advertisements.