Tough norms for ads of risk firms

All advertisements selling insurance products will need to contain information on risks involved, costs and charges and exclusions, according to the new draft guidelines prepared by the insurance regulator.

The comprehensive advertisement code proposed by the Insurance Regulatory and Development Authority (Irda) comes amid complaints that high returns are being promised by life insurers on ULIPs (unit-linked insurance plans), accompanied by non-existent guaranteed returns.

The draft guidelines say: "Any insurance advertisement should have the nature of contract, risks involved, limitations, illustration that indicate exact cost and charges, exclusions, commitment of the insurer and policyholder under the contract." The advertisements covered include print, television, internet, hoardings, brochures and other sales literature used by both life and non-life insurance companies.

As per the draft, all joint sales advertisements, i.e. advertisements by an insurance company and its intermediary which can be its bancassurance partner, can be released only after Irda's approval. All advertisements would have to contain the disclaimer that "the advertisement does not contain full details, please refer to terms/conditions and for full details refer to policy documents".

Insurers would also have to categorise advertisements as institutional advertisements and insurance advertisements. Institutional advertisements are those that promote only the brand image of a company. These would not contain information about products and performance of the company or its funds.

Insurers would no longer be able to use ambiguous words or phrases, use a smaller font size for disclosures and larger one for benefits and make claims regarding ratings/rankings, and disclose benefits without disclosing corresponding limitations or conditions.

The guidelines further say: "Every insurer should maintain an accessible 'do not call registry' which should be referred to before every call, ... promotional activities such as cold calls should be through a licensed intermediary and if an insurer has outsourced it, then the responsibility of compliance should be on the insurance company... Telephonic calls should involve prior permission."