Master Circular on Insurance Advertisements, Oct 2019

INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY OF INDIA irJai MASTER CIRCULAR ON INSURANCE ADVERTISEMENTS (Updated upto 31.08.2019) IRDAI/LIFE/CIR/MISC/189/10/2019 16th October, 2019 VER-02 1 1. Background: 1.1 The success of insurance sal~s communication depends on public confidence and the faith they repose in the insurers, when they receive a communication from Insurers promoting their products. As such, the Insurers are expected to adopt fair, honest and transparent practices in the market-place and avoid practices that tend to impair the confidence of the public. 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. The verbal communication that the prospects receive from the agents/intermediaries can be supplemented by the written material that is made available to them and also serve as authentic reference material. 1.2 With the above background, this Master Circular is issued under Section 34 (1) of the Insurance Act, 1938 read with Section 14 {1), 14 {2) (e) of the IRDA Act, 1999, to protect the interests of the insuring public, enhance their level of confidence on the nature of sales material used and ultimately encourage fair business practices. They are to be considered as the minimum standards to be adhered to, in addition to compliance with the IRDA {Insurance Advertisements and Disclosure) Regulations, 2000 (hereinafter referred to as 'Advertisement Regulations') and the code of conduct prescribed by the Advertisement Standards Council of India {ASCI) and any other laws, regulations as applicable. These provisions reinforce the extant regulations on all promotional communications with policyholders/prospective policyholders or targeted market segment with the objective of soliciting insurance business or otherwise. 2. Categories of Advertisements: For the purpose of these provisions an advertisement may be classified into two types : 2.1 Institutional Advertisements 2.2 Insurance Advertisements 2.1. Institutional Advertisement: This is the advertisement of any nature which is not, either directly or indirectly, intended to solicit the insurance business, but only promotes the brand image of the insurers and/or its intermediaries and may contain the registered name, address, toll-free number, logo or 2 trademark thereof. Advertisements issued in any mode including those that highlight sponsorships fall under this category. Any inclusion of product names or information about the products, performance of the companies or their funds, or the information about the product launches constitutes insurance advertisements as defined in para 2.2 below. 2.2. Insurance Advertisement:-Insurance Advertisement, for this purpose, means Insurance Advertisement as defined in 'Advertisement Regulations' and is further classified as under: 2.2.1 "Invitation to Inquire": This is an advertisement which highlights the basic features of insurance/insurance products issued in any mode '1to generate interest or create a desire to inquire further about them. 2.2.2 "Invitation to Contract": This is an advertisement containing the detailed information regarding the insurance/insurance products mainly to induce the public to purchase, increase, modify, reinstate or retain a policy. 3. Guidelines on Advertisements: 3.1. These provisions are to be complied with by: • All the Insurers (Life Insurers, Non-Life Insurers and Health Insurers) and • The Agents, Point of sales persons, Motor Insurance service providers and Insurance Intermediaries 3.2. Coverage: These provisions apply to advertisements, issued through any mode. 3.3. General Requirements: 3.3.1 3.3.1.1 All insurance advertisements (as indicated in para 2.2 above) should ensure that the following Do's and Don'ts are complied with: Do's Communications are clear, fair and not misleading whatever be the mode of communication. They should use material and design (including paper size, colour, font type and font size, tone and volume) to present the information legibly and in an accessible manner. 3 3.3.1.2 3.3.1.3. 3.3.1.4. 3.3.1.5. 3.3.1.6. 3.3.1.7 3.3.2. 3.3.2.1. 3.3.2.2. Sales material and advertisements are comprehensible in the light of the complexity of the product being sold. The names of the product and benefits as proposed in the File and Use application are adhered to. The mandatory disclosures shall also be in the same language as that of the whole advertisement. All Life Insurance Advertisements must prominently state the availability of underlying element of 'Life Insurance Coverage' to clearly identify the product as an Insurance product. Where any insurance advertisement highlights the I benefit of Guarantees, a clear disclosure of the underlying conditions under which the guarantee operates must be made, wherever applicable. In all such cases, all the conditions (including cost of guarantee, charges) under which the guarantee operates need a prominent mention. If the underlying conditions are very elaborate, the text/wording on Guarantee must be accompanied by the phrase "Conditions Apply" in a font that is at least 50% of the font used to highlight the guarantee. These conditions must be distinctly mentioned in a legible font beneath, not making it part of other applicable disclosures. In respect of Unit Linked Life Insurance Products the actual asset mix of various underlying funds vis-a-vis the asset composition of approved asset pattern shall be placed on the web portal of respective life insurance companies at least on a half yearly basis. This information on investment updates is to ensure that clear, actual and timely information is made available to prospects to make an informed financial decision. Don'ts: The design, content or format shall not disguise, obscure or diminish the significance of any statement, warning or other matter which an advertisement should contain as required by these provisions. Use or denigrate names, logos, brand names, distinguishing marks, symbols etc., which may be similar to those already used by others in the market that may lead to confusion in the market place. 4 3.3.2.3. 3.3.2.4 3.3.2.5 The Names of insurance products or benefits must not use terms or phrases that convey a fabricated sense of security. The features / benefits prominently displayed in the Insurance Advertisements shall not be the features/ benefits that are applicable under extreme/ exceptional scenarios. Life Insurance Advertisements should not offer, as inducement, any award / reward points, discounts and rebates, except those approved by the Authority as part of product features, either from Insurer directly or through arrangement with any third party involving any expenses/ costs/ outgo to the Insurer. 3.4. Specific Requirements for an "Invitation to Contract" (Refer para 2.2.2): 3.4.1. Dos': Advertisements should ensure that: 3.4.1.1. 3.4.1.2. 3.4.1.3. 3.4.1.4. a. Any expression of opinion of the insurer is a fair and honest representation . Any statement of fact, promise or projection discloses all the relevant assumptions; and indicates in a clear and prominent way significant limitations/ criteria on which any special offers are available. Where attention is drawn to insurer's past financial performance it should indicate that the past performance is not necessarily an indication of future performance. The contents should necessarily include: The nature of the insurance contract (i.e., whether traditional/unit linked) and the type of the product (i.e., its uniqueness or otherwise, whether annuity, pension, health or whole life, home owners', shop keepers' policies and any combination thereof, etc.,). b. The risks involved; what is covered as well as what is not i.e. the limitations and exclusions of the contract; c. Illustrations which indicate the exact costs and charges; reasonable projections of benefits in compliance with regulatory provisions; and full disclosures of the basis and sources of information (e.g., disclose date of NAV); 5