Direct response solicitations; notice of payment of compensation

Sec. 39. (a) As used in this section, "direct response solicitation" means a solicitation through a sponsoring or endorsing entity through the mails, telephone, or other mass communications media. (b) As used in this section, "sponsoring or endorsing entity" means an organization that has arranged for the offering of a program of insurance in a manner that communicates that: (1) eligibility for participation in the program is dependent upon affiliation with the organization; or (2) the organization encourages participation in the program. (c) This section applies to any program of insurance that, if issued on a group basis, would not conform to one (1) of the descriptions in section 37 of this chapter. (d) If compensation of any kind will or may be paid, under a program of insurance described in subsection (c), to: (1) a policyholder or sponsoring or endorsing entity in the case of a group policy; or (2) a sponsoring or endorsing entity in the case of individual, blanket, or franchise policies marketed by means of direct response solicitation; the insurer shall cause to be distributed to prospective insureds under the program a written notice that compensation will or may be paid under the program as indicated in subdivision (1) or (2). (e) The notice required under subsection (d) shall be given: (1) whether the compensation that will or may be paid is direct or indirect; and (2) whether the compensation is to be paid to or retained by: (A) the policyholder or sponsoring or endorsing entity; or (B) a third party, at the direction of the policyholder or sponsoring or endorsing entity, or any entity affiliated with the sponsoring or endorsing entity by way of ownership, contract, or employment. (f) The notice required under subsection (d) shall be placed on or accompany any application or enrollment form provided prospective insureds.