In
exercise of the powers conferred by section 26 of the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999), the
Authority in consultation with the Insurance Advisory Committee,
hereby makes the following regulations, namely:
1.
Short title and commencement
(1)
These regulations may be called the Insurance Regulatory and
Development Authority (Insurance Advertisements and Disclosure)
Regulations, 2000.
(2)
They shall come into force on the date of their publication in the
Official Gazette.
2.
Definitions
Unless
the context otherwise requires,--
(a)
"Authority" means the Insurance Regulatory and
Development Authority established under sub-section (1) of section 3
of the Insurance Regulatory and Development Authority Act, 1999 (41
of 1999);
(b)
"insurance advertisement" means and includes any
communication directly or indirectly related to a policy and
intended to result in the eventual sale or solicitation of a policy
from the members of the public, and shall include all forms of
printed and published materials or any material using the print
and/or electronic medium for public communication such as:
(i)
newspapers, magazines and sales talks;
(ii)
billboards, hoardings, panels;
(iii)
radio, television, website, e-mail, portals;
(iv)
representations by intermediaries;
(v)
leaflets;
(vi)
descriptive literature/circulars;
(vii)
sales aids flyers;
(viii)
illustrations form letters;
(ix)
telephone solicitations;
(x)
business cards;
(xi)
videos;
(xii)
faxes; or
(xiii)
any other communication with a prospect or a policyholder that urges
him to purchase, renew, increase, retain, or modify a policy of
insurance.
Explanation :
The following materials shall not be considered to be an
advertisement provided they are not used to induce the purchase,
increase, modification, or retention of a policy of insurance--
(i)
materials used by an insurance company within its own
organisation and not meant for distribution to the public;
(ii) communications with policyholders other than materials urging
them to purchase, increase, modify, surrender or retain a policy;
(iii) materials used solely for the training, recruitment and
education of an insurer's personnel, intermediaries, counsellors and
solicitors, provided they are not used to induce the public to
purchase, increase, modify or retain a policy of insurance;
(iv) any general announcement sent by a group policyholder to
members of the eligible group that a policy has been written or
arranged.
(c)
"intermediary or insurance intermediary" includes
insurance brokers, re-insurance brokers, insurance consultants,
surveyors and loss assessors, or any other person representing or
assisting an insurer in one or more of the following:
(i) soliciting,
negotiating, procuring, or effectuating an insurance contract or a
renewal of an insurance contract;
(ii) disseminating information relating to coverage or rates;
(iii)
forwarding an insurance application;
(iv) servicing and delivering an insurance policy or contract;
(v) inspecting a risk;
(vi) setting a rate;
(vii) investigating or assessing a claim or loss;
(viii) transacting a matter after the effectuation of a contract; or
(ix) representing or assisting an insurer or other person in any other
manner in the transaction of insurance
with respect to a subject of
insurance resident, located or to be performed in India;
(x) servicing a policy or contract.
(d)
"unfair or misleading advertisement" will mean and
include any advertisement:
(i) that fails to clearly identify the product as insurance;
(ii) makes claims beyond the ability of the policy to deliver or
beyond the reasonable expectation of performance;
(iii) describes benefits that do not match the policy provisions;
uses
words or phrases in a way which hides or minimizes the costs of the
hazard insured against or the risks inherent in the policy;
omits
to disclose or discloses insufficiently, important exclusions,
limitations and conditions of the contract;
gives
information in a misleading way;
illustrates
future benefits on assumptions which are not realistic nor
realisable in the light of the insurer's current performance;
where
the benefits are not guaranteed, does not explicitly say so as
prominently as the benefits are stated or says so in a manner or
form that it could remain unnoticed;
implies
a group or other relationship like sponsorship, affiliation or
approval, that does not exist;
makes
unfair or incomplete comparisons with products which are not
comparable or disparages competitors.
(e)
"prospect" means any party that enters or proposes
to enter into an insurance contract directly, or through an
insurance intermediary.
Words
and expressions used and not defined in these regulations but
defined in the Insurance Act, 1938 (4 of 1938), or the Life
Insurance Corporation Act, 1956 (31 of 1956) or the General
Insurance Business (Nationalisation) Act, 1972 (57 of 1972), or
Insurance Regulatory and Development Authority Act, l999 (41 of
1999) shall have the meanings respectively assigned to them in those
Acts or the rules as the case may be.
3.
Compliance and control
(1)
Every insurer or intermediary or insurance agent shall--
(i)
have a compliance officer, whose name and official position
in the organisation shall be communicated to the Authority, and he
shall be responsible to oversee the advertising programme;
(ii)
establish and maintain a system of control over the content,
form, and method of dissemination of all advertisements concerning
its policies;
(iii)
maintain an advertising register at its corporate office which must
include:
(a)
a specimen of every advertisement disseminated, or issued or a
record of any broadcast or telecast, etc.;
(b)
a notation attached to each advertisement indicating the manner,
extent of distribution and form number of any policy advertised; and
(iv)
maintain a specimen of all advertisements for a minimum
period of three years;
(v)
file a copy of each advertisement with the Authority as soon
as it is first issued, together with information:
(a)
an identifying number for the advertisement;
(b)
the form number(s) of the policy(ies) advertised and when the
product/s were approved by the Authority;
(c)
a description of the advertisement and how it is used;
(d)
the method or media used for dissemination of the advertisement;
(vi)
file a certificate of compliance with their annual statement
stating that, to the best of its knowledge, advertisements
disseminated by the insurer or by its intermediaries during the
preceding year have complied with the provisions of these
regulations and the advertisement code as stated in regulation 12.
(2)
The advertisement register shall be subject to inspection and review
by the Authority for content, context, prominence and position of
required disclosure, omissions of required information, etc.
4.
Changes in advertisement
(1)
Any change in an advertisement would be considered a new
advertisement.
(2)
All the provisions of regulation 3 shall apply mutatis mutandis to
an advertisement referred to in sub-regulation (1).
(3)
The Authority shall be informed at the time of filing the
advertisement the extent of change the original advertisement.
5.
Insurance company advertisement
(1)
Every insurance company shall be required to prominently disclose in
the advertisement and that part of the advertisement that is
required to be returned to the company or insurance intermediary or
insurance agent by a prospect or an insured the full particulars of
the insurance company, and not merely any trade name or monogram or
logo.
(2)
Where benefits are more than briefly described, the form number of
the policy and the type of coverage shall be disclosed fully.
6.
Advertisements by insurance agents
(1)
Every advertisement by an insurance agent that affects an insurer
must be approved by the insurer in writing prior to its issue.
(2)
It shall be the responsibility of the insurer while granting such
approval to ensure that all advertisements that pertain to the
company or its products or performance comply with these regulations
and are not deceptive or misleading.
Explanation :
An agent shall not be required to obtain written approval of the
company prior to issue for˙:
(i)
those advertisements developed by the insurer and provided to
the agents;
(ii)
generic advertisements limited to information like the
agent's name, logo, address and phone number; and
(iii)
advertisements that consist only of simple and correct
statements describing the availability of lines of insurance,
references to experience, service and qualifications of agents; but
making no reference to specific policies, benefits, costs or
insurers.
7.
Advertisements by insurance intermediaries
Only
properly licensed intermediaries may advertise or solicit insurance
through advertisements.
8.
Advertisement on the Internet
(1)
Every insurer or intermediary's website or portal shall--
(i)
include disclosure statements which outline the site's
specific policies vis-a-vis the privacy of personal information for
the protection of both their own businesses and the consumers they
serve;
(ii) display their registration/license numbers on their websites.
(2)
For the purposes of these regulations, except where otherwise
specifically excluded or restricted, no form or policy otherwise
permissible for use shall be deemed invalid or impermissible if such
form or policy accurately reflects the intentions of the parties in
such form or policy as published electronically or transmitted
electronically between parties.
9.
Identity of advertiser
Every
advertisement for insurance shall--
(i)
state clearly and unequivocally that insurance is the
subject-matter of the solicitation; and
(ii) state the full registered name of the
insurer/intermediary/insurance agent.
10.
Endorsements and other third party involvement
(1)
A third party, group or association shall not--
(i)
distribute information about an insurance policy,
intermediary or insurer on its letterhead;
(ii) allow an insurance intermediary or insurer to distribute
information about an insurance policy, insurance or insurance
company on its letterhead;
(iii)
distribute information about an individual insurance policy, or
about an intermediary or insurer in its envelopes, unless--
(a)
the third party is providing only a distribution service for the
insurance advertisement and is not itself soliciting the coverage,
and
(b)
the insurance information is a piece separate from any other
information distributed by the third party and clearly indicates its
origin;
(iv) recommend that its members purchase specific insurance
products;
(v)
imply that a person must become a member of its organization
in order to purchase the policy;
(vi)
imply that a purchaser of a policy by becoming a member of a
limited group of persons shall receive special advantages from the
insurer not provided for in the policy:
PROVIDED
that a third party, group or association may--
(i)
endorse an insurance company or insurance intermediary's product and
provide truthful statements, quotes and testimonials endorsing the
insurance products to the insurance company for use in the company's
advertisements, so long as the language does not convey directly or
indirectly a recommendation that members of the organisation
purchase the products,
(ii)
provide an insurance company with information about its membership
and collect compensation based upon sales for that information.
11.
Procedure for action in case of complaint
(1)
If an advertisement is not in accordance with these regulations, the
Authority may take action in one or more of the following ways--
(i)
issue a letter to the advertiser seeking information within a
specific time, not being more than ten days from the date of issue
of the letter;
(ii)
direct the advertiser to correct or modify the advertisement
already issued in a manner suggested by the Authority with a
stipulation that the corrected or modified advertisement shall
receive the same type of publicity as the one sought to be corrected
or modified;
(iii) direct the advertiser to discontinue the advertisement
forthwith;
(iv)
any other action deemed fit by the Authority, keeping in view
the circumstances of the case, to ensure that the interests of the
public are protected.
The
advertiser may seek additional time from the Authority to comply
with the directions justifying the reasons therefor. The Authority,
may, however, refuse to grant extension of time if it feels that the
advertiser is seeking time only to delay the matters.
Any
failure on the part of the advertiser to comply with the directions
of the Authority may entail the Authority to take such action as
deemed necessary including levy of penalty.
12.
Adherence to advertisement code
Every
insurer or intermediary shall follow recognised standards of
professional conduct as prescribed by the Advertisement Standards
Council of India (ASCI) and discharge its functions in the interest
of the policyholders.
13.
Statutory warning
(1)
Every proposal for an insurance product shall carry the following
stipulation, as prescribed in section 41 of the Insurance Act, 1938
(4 of 1938):
"No
person shall allow or offer to allow, either directly or indirectly,
as an inducement to any person to take out or renew or continue an
insurance in respect of any kind of risk relating to lives or
property in India, any rebate of the whole or part of the commission
payable or any rebate of the premium shown on the policy, nor shall
any person taking out or renewing or continuing a policy accept any
rebate, except such rebate as may be allowed in accordance with the
published prospectus or tables of the insurer."
(2)
If any person fails to comply with sub-regulation (1) above, he
shall be liable to payment of a fine which may extend to Rupees five
hundred.
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