(a) With respect to a program of insurance which if issued on a group basis would not qualify under §§ 3502-3508 of this title, if compensation of any kind will or may be paid 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 polices marketed by means of direct response solicitation,

then in such cases the insurer shall cause to be distributed to prospective insureds a written notice that compensation will or may be paid.

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(b) The written notice required by subsection (a) of this section shall be distributed:

(1) Whether compensation is direct or indirect; and

(2) Whether such compensation is paid to or retained by the policyholder or sponsoring or endorsing entity, or paid to or retained by a third party at the direction of the policyholder or sponsoring or endorsing entity, or any entity affiliated therewith by way of ownership, contract or employment.

(c) The notice required by subsection (a) of this section shall be placed on or accompany any application or enrollment form provided prospective insureds.

(d) As used in this section, the following terms shall have the meanings indicated:

(1) “Direct response solicitation” means a solicitation through a sponsoring or endorsing entity through the mails, telephone or other mass communications media;

(2) “Sponsoring or endorsing entity” means an organization which has arranged for the offering of a program of insurance in a manner which communicates that eligibility for participation in the program is dependent upon affiliation with such organization or that it encourages participation in the program.

66 Del. Laws, c. 175, § ?1;