IRDAI has recently notified restrictions and regulations for insurance companies on advertising policies to safeguard consumer interests.
IRDAI, via recently issued circular, said, “To ensure that the insurers, intermediaries or insurance intermediaries adopt fair, honest and transparent practices while issuing advertisements and avoid practices that tend to impair the confidence of the public.”
IRDAI wants the advertisement to be relevant, fair and written in simple language so that customers can make an informed decision.
According to IRDAI, if a policy buyer fails to identify the product as insurance in any advertisement or describes benefits that do not match the policy provisions, it will be termed unfair or misleading advertisement.
Some of the other reasons for considering an advertisement misleading are:
- Using words or phrases in a way that may hide or underplay the risks inherent in the policy
- Not disclosing or disclosing insufficiently important exclusions, limitations and conditions of the policy
- Providing information in a misleading way
- Making unfair or incomplete comparisons with products that are not comparable or disparage competitors
- Illustrating future benefits on assumptions that are not realistic nor realisable in the light of the insurer’s current performance; or deviating from the stipulation by the authority through regulatory provisions
- Where the benefits are not guaranteed, not explicitly saying so or saying it in a manner or form that it could remain unnoticed
- Using design, content or format which disguise, obscure or diminish the significance of any statement, warning or other matter which an advertisement should contain.
- Using terms or phrases that convey a fabricated sense of security.
- Where features or benefits prominently displayed are the features or benefits that are applicable under extreme or exceptional scenarios.
- Using names, logos, brand names, distinguishing marks, symbols etc., which may be similar to those already used by others in the market that may lead to confusion in the market place.
Every insurer, intermediary or insurance intermediary will have a compliance officer, whose name and official position in the organisation will have to be communicated to IRDAI, and who will be responsible to oversee the advertising programme. Further, he/she will have to maintain a system of control over the content, form, and method of dissemination of all advertisements concerning its policies or products.
