Insurance regulator IRDAI, in a bid to protect consumers, has proposed to prohibit insurers from issuing advertisements that make claims which are beyond reasonable expectations of performance.
The unfair and misleading advertisements will include those which fail to clearly identify the product as insurance and describe benefits that do not match the policy provisions, the regulator said in the draft titled Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2020.
The regulator is seeking to come out with new advertisement regulations and has invited comments from stakeholders on the exposure draft by 10 November.
IRDAI said that the objective of the proposed regulation is to ensure that the insurers, intermediaries or insurance intermediaries adopt fair, honest and transparent practices while issuing advertisements, and avoid practices that tend to impair the confidence of the public.
Another objective of the proposed regulation is to ensure that the publicity material is relevant, fair and in simple language, enabling informed decision making.
According to the draft, misleading advertisements will also include those which fail to disclose or disclose insufficiently important exclusions, limitations and conditions of the contract.
The illustrations regarding future benefits on assumptions which are not realistic nor realisable in the light of the insurer's current performance, or deviate from the stipulation by the authority through regulatory provisions will also be treated as misleading advertisements.