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The Insurance Regulatory and Development Authority of India (IRDAI) has asked life insurance companies not to advertise unit-linked plans as investment products in a recent circular.
“Unit-linked or index-linked insurance products shall not be advertised as ‘investment products’. In the case of unit-linked insurance products (Ulip), index-linked products, and annuity products with variable annuity payout options, the risk factors shall be disclosed,” the regulator said.
Insurance companies will have to specifically state that market-linked insurance plans are different from traditional endowment policies and carry risks. Likewise, participating (with bonus) endowment policies will have to state upfront that the bonuses projected in benefit illustrations are not guaranteed.
As a measure to boost transparency, the regulator said that the advertisement committee of the company and/or a senior-level officer of the distribution channel will examine and approve the advertisements and ensure that they are not misleading.
IRDAI also said that policyholders can access information on unclaimed amounts with any insurer on the Bima Bharosa portal.
Unclaimed life insurance funds refer to the proceeds of insurance policies, including death or survival benefits, not claimed by the beneficiary or the policyholder.
According to IRDAI, which has issued the Master Circular on Protection of Policyholders’ Interests, Operations, and Allied Matters of Insurers Regulations, 2024, this data will be available in one portal along with the individual websites of the insurers.
The regulator has also asked the companies to have a tech-based robust mechanism for grievance redressal of policyholders for an efficient and speedy resolution, while striving to move towards “zero grievances”.
“By guiding insurers to establish effective processes for addressing grievances, the government is setting a high standard of accountability and responsiveness. The goal of achieving zero grievances is ambitious yet crucial, as it reflects a dedication to resolving issues promptly and efficiently with increased standards of customer interactions and awareness,” said Shashi Kant Dahuja, Executive Director and Chief Underwriting Officer, Shriram General Insurance.
Insurers are required to establish regular customer interfaces through consumer-friendly processes, running awareness campaigns, facilitating the submission of grievances online and ensuring the registration of all grievances; strengthen resolution processes with an internal escalation matrix (if not satisfied with resolution at the first level) and Internal Ombudsman Schemes.
Also, insurance companies are permitted to outsource activities only if they are economic and efficient in providing services to customers. These outsourcing activities will be under the oversight of the committee set up by the board, the regulator said.
