In order to tighten the regulatory framework on issuing advertisements by insurance companies to curb mis-selling in the sector, regulator Irdai has proposed to amend the extant guidelines on advertisements and disclosure in line with the principle based approach.
The regulator has issued draft amendments and a draft circular to amend the Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021, with an objective to assign higher responsibility on the senior management of insurance companies while designing and approving the advertisements for the consumption of the customers.
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Irdai has proposed to modify the existing procedure of filing of advertisements, thereby enabling the Product Management Committee (PMC) responsible for the approval of advertisements. Insurance advertisements are considered to be the integral part of product filing procedure.
“Each insurer shall constitute an advertisement committee reporting to the Product Management Committee. The advertisement committee shall have at least three members mandatorily from marketing, actuarial and compliance functions of the insurer,” according to the draft circular.
It has proposed that all the insurance advertisements hereafter should be submitted to the advertisement committee.
The advertisement committee should examine the advertisements and make suitable recommendations to the Product Management Committee. Also, the Product Management Committee shall be the final authority either to approve or reject the advertisements, after examining the recommendations of the advertisement committee. Product Management Committee and advertisement committee should be accountable and fully responsible for releasing the approved advertisements.
“It is basically to prevent mis-selling and also to ensure that the right information is being spread. Advertisements should not be misleading. You cannot use the term like we are the best insurance company,” a senior official at a large general insurance company told FE.
In the draft circular, Irdai said Product Management Committee of an insurer should ensure to maintain a register of all advertisements including the details of filings, approved, rejected and withdrawn. The records for all the advertisements, as per the record retention policy of the insurer or at least three years from the date of withdrawal of the advertisement and should be made available to the regulator as and when called for.
“The insurer shall upload the advertisement, on their website in the chronological order of URN within three days of releasing the approved advertisements. Insurers are advised to set up proper robust systems to upload advertisements on their website within three days of release,” it added.
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Irdai has asked all the stakeholders to submit their comments and suggestions, if any, on the proposed amendment in the regulations and draft circular in the given format by May 25, 2023.
Two year ago the regulator had issued the Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021, in order to ensure that insurers and intermediaries adopt fair, honest and transparent practices while issuing advertisements and avoid practices that tend to impair the confidence of the public.