The Insurance Regulatory and Development Authority of India (Irdai) has asked insurers to ensure that advertisements of insurance products are clear and do not convey a fabricated sense of security to prospective customers.

The agency has issued a circular on ‘insurance advertisements’ that outlines has prescribed dos and don’ts for insurance companies to comply with:

  • All insurance advertisements should ensure that “communications are clear, fair and not misleading whatever be the mode of communication”.
  • Material and design (including paper size, colour, font type and font size, tone and volume) should be used to present the information legibly and in an accessible manner.
  • “Names of insurance products or benefits” must not use terms or phrases that convey a fabricated sense of security.
  • Mandatory disclosures should be in the same language as that of the whole advertisement.
  • For communications through the internet, an “insurer should ensure that the recipients/viewers have the opportunity to view the full text of the relevant key features; terms and conditions; any other applicable risk information... they shall not be hidden away in the body of the text”.
  • All licensed entities soliciting insurance business should mention their identity and contact details.

Irdai stated that the success of insurance sales communication depends on public confidence and the faith they put in the insurers, when they receive a communication from companies promoting their products.

“As it may be difficult for the public to understand and evaluate the inherent details in the various insurance products, it is of paramount importance that the publicity material is relevant, fair and in simple language enabling informed decision making about whether or not to buy a specific insurance product,” it said.

Any person found to be guilty of misleading the prospect on any insurance product will be liable for regulatory actions, it added.

The circular on advertising comes as the Indian government introduces new laws intended to make health insurance more user-friendly.

Some of the changes include a standard health insurance plan for all with a basic sum insured of ₹50,000 (US$705) to ₹10 lakh (US$14,111) as per customer requirements. The minimum age of entry for buying the policy will be 18 years and the maximum age will be 65 years. The plan will be indemnity-based with lifelong renewability option.

The agency has also mandated that the standard health insurance plan will also provide coverage for expenses incurred on alternative treatment such as AYUSH, which includes homeopathy, ayurveda, siddha or unani.

It has also directed insurers to include mental illnesses in all regular health insurance policies, and insurers cannot deny coverage to policyholders who have used opioids or anti-depressants in the past.

Sourced from The Economic Times, The Hindu, The Business Insider India