The Insurance Regulatory and Development Authority of India has proposed stricter regulations on insurance advertisements in a bid to promote greater transparency and accountability. The proposed amendments will require senior management of insurance companies to take more responsibility in designing and approving media campaigns for product promotion
The Insurance Regulatory and Development Authority of India (IRDAI) is considering stricter regulations for insurance advertisements. The proposed amendments to the 2021 regulations on insurance advertisements and disclosure will require senior management of insurance companies to take greater responsibility in designing and approving media campaigns for product promotion.
Under the new regulations, each insurer will be required to form an advertisement committee comprising at least three members from the marketing, actuarial, and compliance functions. This committee will be responsible for reviewing and reporting to the product management committee, which will have the final authority to approve or reject advertisements.
The product management committee and advertisement committee will be held accountable and fully responsible for releasing the approved advertisements. Moreover, the product management committee must maintain records of all advertisements, as per the insurer’s record retention policy, for at least three years from the date of withdrawal of the advertisement.
At present, the process for approving advertisements is based on ‘File and Use’ applications, which must comply with IRDAI advertisement regulations and circulars.
The goal of the amendment is to ensure that senior management takes greater responsibility in designing and approving advertisements for customers’ consumption. These new regulations will also provide greater transparency and accountability in the promotion of insurance products, thus protecting customers from misleading or false advertisements.
Previously, in May 2022, IRDAI had issued strict guidelines to general insurers to prevent them from publishing misleading advertisements related to insurance. All general insurers, except standalone health insurers and specialised insurers, were required to adhere to specific guidelines.
At that time, general insurance companies had service agreements with motor workshops and garages to offer motor insurance claims for repairs and damages incurred in accidents. However, IRDAI discovered that the service agreements extended beyond claim services and included non-insurance-related assistance services, such as free pick-up and drop-off vehicles, body wash, interior cleaning, inspection of vehicles, and others.
IRDAI said that while the motor service providers could bundle these services with insurance, general insurers were not permitted to issue advertisements that projected them as benefits provided within the insurance cover. The circular issued by IRDAI at that time made it clear that the primary objective of service agreements with motor garages or workshops was only to provide insurance services for claims of accident vehicles, and it could not arbitrarily expand to include the scope of services that were not relevant for insurance claims.
Insurers were advised to discontinue advertisements in relation to non-insurance-related services provided by motor garages/workshops. Insurers were also requested to refrain from displaying
discounts with reference or comparison to rates of the erstwhile tariff. They were also instructed to ensure that the discounts and savings in the premium, which may be applicable only under extreme or exceptional scenarios, were not displayed as examples.