The insurance regulator is set to launch a crackdown on advertisements by insurance companies that show their standing in the industry, with respect to their ranking. The Insurance Regulatory and Development Authority (Irda) has sent notices to companies like New India Assurance to ensure that they do not publish their ranking in any advertisements.
According to the Insurance Advertisements and Disclosures Regulations, 2000, insurance companies cannot make advertisements, which can be “misleading” or which make unfair comparisons between companies and their products. The companies have also been advised to follow the code of conduct prescribed by the Advertising Standards Council of India (ASCI).
“No claim of ranking by an insurance company, as regards its position in the insurance market, based on any criteria (like premium income or number of policies or branches or claims settlements, etc.,) is permissible in any of the advertisements,” Irda had earlier stated in its regulations.
Only ratings given by external agencies can be given. Any claim of rating/award should be based only on those declared by entities which are independent of the insurance company and its affiliates. However, an insurance company and its affiliates should not procure services from such independent entities so as to get a rating/award.
An industry source said the regulator had questioned New India Assurance on its claim in its advertisements. This, however, is based on its premium collection. But, as per Irda norms, since no ranking claims are allowed, the insurance company was asked to make changes in the advertisements. The company has now revised its advertisements to say that it is a 'premier' general insurance company.
A senior executive of a private non-life insurer said, "Though the ranking-based advertisements of an insurer may be factually correct, since it is based on data and figures given out by Irda, now the regulator is ensuring that no such rankings are mentioned in public advertisements. This is to make sure that prospective and current policyholders do not make any false assumptions based on these claims."
Sources said several other private non-life players have also been asked to make amends in their advertisements. An Irda official said as this was not permissible under law and customers might not be fully aware of the exact criteria used by the company to make these claims, it would not be fair to bring out such advertisements.