Insurance Advertisements and Disclosure for ( IRDA Intermediaries like Insurance Broker )

Insurance Advertisements and Disclosure

As per F. No. IRDAI / Reg / 2 / 174 / 2021 – In exercise of the powers conferred by clause (zd) of sub-section 2 of section 114A of Insurance Act,1938 read with Sections 14 and 26 of the Insurance Regulatory and Development Authority Act, 1999 (41 of 1999)

“Short Title and Commencement”

Key Points:

• Title: The regulations are known as the Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021.
• Effective Date: The regulations came into force on the date of their publication in the Official Gazette.

“Objective”

Key Points:

• Fair Practices: Insurers, intermediaries, and insurance intermediaries are expected to adopt fair, honest, and transparent practices for advertising.
• Public Trust: Practices that could impair public confidence are to be avoided.
• Informed Decision Making: Advertisements should enable informed decisions through clear, relevant, and fair information in simple language.

“Definitions”

Definitions:

• Authority: Refers to the Insurance Regulatory and Development Authority of India, established under the Insurance Regulatory and Development Authority Act, 1999.
• Advertisement: Any communication made to influence the opinion or behavior of the public via any mode or medium, including insurance and institutional advertisements.
• Unspecified Terms: Words not defined in these regulations but defined in the Insurance Act, 1938, the Life Insurance Corporation Act, 1956, the General Insurance Business (Nationalisation) Act, 1972, or the Insurance Regulatory and Development Authority Act, 1999 will carry the same meanings as assigned in those respective Acts.

“Applicability”

Key Points:

• Entities: These regulations apply to all insurers, intermediaries, and insurance intermediaries in India.
• All Advertisements: The regulations apply to all forms of advertisements related to insurance policies or insurance business, including invitations to contract.
• Testimonials: These regulations also cover endorsements, testimonials, and comments about the insurance products by third parties.
• Advertisements before regulation enforcement: Advertisements already released before the coming into force of these regulations are not subject to these regulations.

“Interpretations”

Key Points:

• Advertise: Refers to drawing public attention to the insurer’s name, insurance intermediaries, insurance products, or insurance business in any way.
• Advertisement Code: The code laid out by the regulations regarding the publication of advertisements, including the expectations and limitations.
• Insurer: Refers to an insurance company conducting insurance business in India, licensed by IRDAI.
• Insurance Intermediary: Refers to insurance agents, insurance brokers, insurance marketing firms, web aggregators, or any other entity recognized by the Authority.
• Insurance Advertisement: Any advertisement inviting the public to contract for any insurance product.
• Institutional Advertisement: An advertisement having as its sole purpose the promotion of the insurer, the insurance intermediary, or insurance business and not the promotion of any insurance product.

These points outline the foundational elements of the regulation: its designation, the time it comes into effect, the intent behind its creation, and the definitions of key terms used throughout the document, aligning the framework for how the content within the regulation documents is to be interpreted. These points further expand the scope and interpretation of various terminologies and applicability aspects of the Advertisement Regulation 2021. The delineation of the terms and conditions provides clarity on the responsibility and application of the regulations across various company types and advertisement forms in the insurance sector.

Key Points on “Explanation with Regard to Advertisements” from Advertisement Regulation 2021

1. Substantiation of Claims:
   • Advertisers should be able to substantiate all claims made in their advertisements with appropriate evidence or documentation.
2. Guaranteed and Non-guaranteed Benefits:
   • If benefits are not guaranteed, that fact should be clearly stated as prominently as the benefits themselves.
3. Accurate Representation:
   • Advertisements should not imply a group affiliation, sponsorship, or approval that doesn’t exist.
4. Fair Comparisons:
   • Comparisons with other products should be fair, complete, and accurate without unfairly disparaging competitors or their products.
5. Intellectual Property Respect:
   • Advertisements must not use names, logos, brand names, distinguishing marks, symbols, etc., similar to those used by others that could lead to confusion in the marketplace.
6. Clear Disclosure:
   • The significance of any statements, warnings, or other matters which the advertisement must contain should not be diminished or obscured by design, content, or format.
7. Addressing Misconceptions:
   • Any misconceptions or misunderstandings arising from advertisements must be addressed promptly by insurers.
8. Misleading Use of Information:
   • Avoidance of using design, content, or formats that may disguise, obscure or diminish the importance of any statement or information that should be included in the advertisement.

Key Points on Explanation with Regard to Advertisements from Advertisement Regulation 2021

These guidelines ensure that advertisements remain truthful, are not misleading, and provide consumers with the necessary information to make an informed choice. The regulations aim to foster transparency and trust between insurers and consumers.

Key Points on “Unfair or Misleading Advertisement” from Advertisement Regulation 2021

An “Unfair or Misleading Advertisement” can be defined using several criteria:

1. Product Identification:
   • Fails to clearly identify the product as insurance in any insurance advertisement.
2. False Claims:
   • Makes claims beyond the ability of the policy to deliver or beyond the reasonable expectation of performance.
3. Misrepresenting Benefits:
   • Describes benefits that do not match the actual policy provisions.
4. Underplaying Risks:
   • Uses words or phrases in a way that hides or underplays the risks inherent in the policy.
5. Lack of Disclosure:
   • Omits to disclose, or discloses insufficiently, important exclusions, limitations, and conditions of the policy.
6. Misleading Information:
   • Gives information in a deceptive or misleading way.
7. Unrealistic Assumptions:
   • Illustrates future benefits based on assumptions that are not realistic nor realizable in light of the insurer’s current performance or deviates from the stipulation by the authority through regulatory provisions.

Key Points on Explanation with Regard to Advertisements from Advertisement Regulation 20211

Every insurer, intermediary, or insurance intermediary should avoid such advertising practices to maintain an ethical business environment and foster better relationships with customers. Doing so would not only establish trust and confidence with customers but also ensure abidance by the regulatory framework set by the Authority.

Key Points on “Compliance and Control” from Advertisement Regulation 2021

1. Compliance Officers:
   Every insurer, intermediary or insurance intermediary shall appoint a compliance officer. This officer’s name and official position within the organization will be communicated to the Authority, and they will oversee the advertising program.
2. System Establishment:
   Entities should establish and maintain a system of control over the content, form, and method of dissemination of all advertisements pertaining to their policies or products.
3. Personal Information Protection:
   Entities must protect personal information for the welfare of both their businesses and the consumers they serve.
4. Presence of Registration Numbers:
   Insurers, intermediaries, and insurance intermediaries will have to display their registration numbers on their websites.
5. Ensuring Full Text View for Audiences:
   With communications on or through the internet or any other electronic media, entities should ensure that recipients can view the full text of key features, coverage and exclusions, terms and conditions, and any other applicable risk information.
6. Unsubscription from Mailing List:
   In cases of email communication, a provision to unsubscribe from the mailing list should be made available.
7. Content Compliance on Social Media Platforms:
   Entities must ensure that the static or interactive content posted by them on social media platforms satisfies the provisions of these regulations. They also need to monitor the interactive content posted on their platform by a third party for compliance with the applicable legal framework.
8. Advertisement Register:
   Entities should maintain an advertising register at their corporate office, including:
   • A specimen of every circulated advertisement or a record of any broadcast, telecast, etc.
   • A notation attached to each advertisement indicating the distribution manner and extent, and the UIN number of any policy or product advertised.
9. Advertisement Specimen Maintenance:
   All specimens of advertisements should be retained for at least three years.
10. Filing of Advertisements with Authority:
    A copy of each advertisement should be filed with the Authority within 7 days of its release, together with information:

• An identifying number for the advertisement.
• The UIN number(s) of the policy(ies) or products advertised in case of an insurance advertisement.
• A description of the advertisement and how it is used.
• The method or media used for dissemination of the advertisement.

1. Annual Compliance Certificate Submission:
   A certificate of compliance must be filed stating that, to the best of its knowledge, advertisements disseminated during the preceding year have complied with the provisions of these regulations and the advertisement code as stated in Regulation 13. This should be done within 30 days of the financial year closing.

“Compliance and Control” from Advertisement Regulation 2021

These key points stress the importance of monitoring and managing advertisement practices to ensure compliance with established regulations, thereby leading to fair business practices and protecting consumer interests.

Key Points on “Changes in Advertisements” from Advertisement Regulation 2021

1. Definition of New Advertisement:
   • A change in an advertisement will generally be considered the creation of a new advertisement, necessitating compliance with all relevant regulations for new advertisements.
2. Exceptions to Consideration as New:
   • Changes confined to contact details, toll-free numbers, images, or translations of the advertisement into other languages without changing the content, design, or intent are not considered the creation of a new advertisement.
3. Authority Notification:
   • The issuing entity must inform the Authority about the extent of changes from the original advertisement at the time of filing for approval, clearly distinguishing between minor alterations and those constituting a new advertisement.
4. Compliance for Changes:
   • All rules and regulations that apply to the original advertisement will also apply to the changed advertisement, ensuring consistency in regulatory compliance.

These points emphasize the criteria and process for managing changes in insurance advertisements, maintaining transparency and compliance throughout the advertisement’s lifecycle.

Key Points on “Clarity in Advertisements” from Advertisement Regulation 2021

1. Clear Communication:
   • All advertisements should ensure clear, fair, and non-misleading communication. This applies across all modes of communication and should be easy for the average consumer to understand.
2. Material and Design:
   • The material and design of an advertisement, including paper size, color, font type and size, tone, and volume, should present information legibly and in an accessible manner.
3. Language Consistency:
   • Mandatory disclosures should be in the same language as the rest of the advertisement.
4. Identification of Insurance Products:
   • Insurance advertisements should clearly identify the product as an insurance product by prominently stating the underlying element of ‘insurance coverage’.
5. Product Names and Benefits:
   • The names of the product and benefits in insurance advertisements should be as per the product filed with the Authority.

These key points ensure that consumers are provided clear, understandable information, aiding in informed decision-making while preventing misleading or deceptive advertising practices.

Key Points on “Advertisements by Insurance Agents” from Advertisement Regulation 2021

1. Insurance Agent Ad Approval:
   • Every advertisement by an insurance agent must be approved by the insurer in writing before its release.
2. Insurer’s Responsibility:
   • The insurer is responsible for ensuring that all advertisements associated with the company, its products, or performance comply with the regulations and do not contain any deceptive or misleading information.
3. Exemptions:
   • An insurance agent is not required to obtain the company’s written approval before releasing advertisements:
     • Developed by the insurer and provided to the agents.
     • Generic advertisements limited to information like the agent’s name, logo, address, and phone number.
     • Advertisements containing simple, accurate statements describing the availability of lines of insurance, references to experience, service, and qualifications of agents and not referring to specific policies, benefits, costs, or insurers.

These key points make it clear that while agents have a degree of freedom to advertise, oversight still heavily lies with the insurer to maintain a fair and transparent approach. This also minimizes the chances of consumers being misled by agents’ advertisements.

Key Points on “Advertising on the Internet or Through Electronic Media” from Advertisement Regulation 2021

1. Full Disclosure of Key Features:
   • Advertisements must ensure that recipients have the opportunity to view the full text of key features, coverage and exclusions, terms and conditions, and any other applicable risk information.
2. Visibility of Information:
   • Important information must not be hidden in the body of text and should be easily obtainable, especially before an application or proposal form is offered.
3. Unsubscription Option:
   • In case of email communications, there should always be a provision for recipients to unsubscribe from the mailing list.
4. Content Monitoring:
   • Insurers and intermediaries should monitor interactive content posted on their platforms by third parties to ensure compliance with legal frameworks.
5. Static and Interactive Content Compliance:
   • Static (non-changing) or interactive (engaging) content posted on social media platforms must satisfy the regulations’ provisions.
6. Clear Display of Registration Numbers:
   • Insurers, intermediaries, and insurance intermediaries are required to display their registration numbers on their websites.

By setting these standards, the Advertisement Regulation 2021 aims to leverage technological advancements while ensuring consumer protection remains a priority in the digital space.

Key Points on Endorsement and Other Third Party Involvement from Advertisement Regulation 2021

1. Distribution of Information:
   • A third party, whether individual or entity, can distribute information about an insurance policy or insurer only if it provides just a distribution service for the advertisement without soliciting insurance itself.
2. Clear Source Identification:
   • The insurance information or advertisement distributed by the third party must be distinct from other information they distribute and must clearly indicate its source.
3. Restrictions on Recommendations:
   • No third party can recommend that its members purchase specific insurance products.
4. No Membership Implication:
   • Third parties cannot imply that a person must become a member of their organization to be eligible to purchase an insurance policy.
5. No Special Advantages from Group Membership:
   • It cannot be implied that a purchaser of an insurance policy might receive special advantages from the insurer by becoming a member of a limited group of people, unless these advantages are stated within the insurance policy or product.

This part of the regulation ensures clarity, fairness, and transparency in instances of third-party involvement, enhancing consumer protection and confidence in the insurance sector.

Key Points on Rating, Ranking, or Awards from Advertisement Regulation 2021

1. Source of Claims:
   • Claims regarding ratings, awards, or rankings in advertisements must be based on those declared by entities independent of the insurer, intermediary, or insurance intermediary and their affiliates.
2. Prohibition of Influence:
   • Insurers and intermediaries are not allowed to pay or procure services from independent entities for the sole purpose of receiving a rating or award.
3. Validity Period:
   • The validity of any advertised award or rating is limited to 12 months or until the announcement of the next edition of the award by the same entity, whichever comes first.
4. Disclosure Requirements:
   • Advertisements must conspicuously and legibly disclose the source of the rating or award, including the year it was received.
5. No Market Position Claims:
   • Claims of ranking by insurers or intermediaries based on market position, such as premium income, number of policies, branch networks, or claims settlements, are not permitted in advertisements.
6. Compliance with Regulatory Guidelines:
   • All claims related to ratings, rankings, or awards in advertisements must comply with guidelines issued periodically by the regulatory authority.

This section of the Advertisement Regulation 2021 ensures that any use of ratings, rankings, or awards in advertising is transparent, verifiable, and free from practices that could mislead consumers.

Key Points on Procedure for Action for Violation of Regulatory Provisions (Advertisement Regulation 2021)

1. Initial Inquiry:
   • Upon identifying a potential violation in an advertisement by an insurer, intermediary, or insurance intermediary, the Authority may issue a letter seeking detailed information within a specified timeframe, usually no more than ten days.
2. Correction or Modification Directive:
   • The Authority can direct the concerned party to correct or modify the contentious advertisement. The corrected or modified advertisement must receive equivalent visibility as the original.
3. Discontinuation Order:
   • Immediate discontinuation of the advertisement can be ordered if deemed necessary by the Authority.
4. Broad Discretionary Powers:
   • The Authority holds the power to take any action it sees fit, considering the situation’s specifics, to protect public interest.
5. Request for Additional Time:
   • The violating entity has the right to request additional time to comply with directives, provided they justify their reasons. However, the Authority has the discretion to refuse this request if it appears to be a tactic to delay compliance.
6. Penalties for Non-compliance:
   • Failure to adhere to regulations or to follow through with the Authority’s directives can result in penalties, the severity of which depends on the nature and extent of the violation.
7. Obligation Towards Adherence to Advertisement Code:
   • Entities are required to follow standards of professional conduct as prescribed by the Advertisement Standards Council of India (ASCI), ensuring their functions align with policyholder interests.
8. Statutory Warning Requirement:
   • All proposal forms for insurance products must include a stipulation against offering inducements beyond what is allowed by the insurer’s prospectuses or tables, in line with section 41 of the Insurance Act, 1938.
9. Applicability to Past Advertisements:
   • The regulations cover advertisements released prior to their enforcement, ensuring a retroactive compliance mechanism.

This structured approach reflects a commitment to maintaining integrity and transparency in insurance advertisements, safeguarding consumer interests and ensuring that all promotional content is accurate, transparent, and devoid of misleading information.

If you want to know more on transparency in insurance advertisements feel free to reach us : info@estabizz.com

Team, Estabizz Fintech Private Limited.

https://www.estabizz.com/

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