Insurance companies, which rely heavily on advertisements, will have to change the way they advertise their products. The insurance regulator IRDAI has come out with a stringent advertisement policy for the entire gamut of the insurance industry and widened the ambit of “unfair or misleading advertisement” with several dos and don’ts.
IRDAI said all insurers will have to publish claims paid ratios, as per the instructions issued from time to time. The regulator said the advertisement can’t illustrate future benefits on assumptions which are not realistic or realisable in the light of the insurer’s current performance or deviates from the regulatory provisions. This is applicable in the case of benefits which are not guaranteed and the advertisement does not explicitly say so as prominently as the benefits are stated or says so in a manner or form that it could remain unnoticed, it said.
“The new policy will mean additional cost for insurers. Customers may benefit from the new policy,” said an insurance source.
The regulator has also asked the insurers to issue a statutory warning, saying, “No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectus or tables of the insurer.”
The names of the product and benefits will be as per the product filing with the IRDAI. Unfair or misleading advertisement means and includes any advertisement that fails to clearly identify the product as insurance and makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance. It also describes benefits that do not match the policy provisions, uses words or phrases in a way which hides or minimizes the costs of the hazard insured against or the risks inherent in the policy, omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the contract and gives information in a misleading way.
The regulator said advertisement should not make unfair or incomplete comparisons with products which are not comparable or disparages competitors. They can’t use or denigrate names, logos, brand names, distinguishing marks and symbols which may be similar to those already used by others in the market that may lead to confusion in the market place. Insurers can’t use terms or phrases that convey a fabricated sense of security.
On using rating or ranking or awards in the advertisements, the regulator said any claim of rating or award should be based only on those declared by entities which are independent of the insurers and its affiliates. Insurers and its affiliates should neither pay nor procure services from such independent entities so as to get a rating or award.
In the case of communications on or through internet or any other electronic media, an insurer or intermediary should ensure that the recipients or viewers have the opportunity to view the full text of the relevant key features; relevant terms and conditions. Any other applicable risk information should not be hidden away in the body of the text. It can be easily obtained, before any application form is offered.
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