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IRDAI has asked general insurance companies not to mislead people by displaying deep discounts and features which are not part of the policy claim.
This has come after IRDAI watched series of advertisements especially by new age general insurers which claim to offer discount of up to Rs.50,000 on 5 year long term motor insurance policy. IRDAI said that these discounts are applicable on extreme and exceptional scenario and hence, it cannot be highlighted through advertisements.
IRDAI said, “A perusal of advertisements issued by a few general insurers showing discounts up to certain percent, saving in the premium etc., and the illustrations provided therein, reveals that the features or benefits are applicable under extreme or exceptional scenarios as defined under IRDAI (Insurance Advertisements and Disclosure) Regulations, 2021. The discounts in certain advertisements are not shown objectively on filed rates but expressed in comparison to rates of erstwhile tariff. This is not to be done. Considering that the quoting of motor premium rates is dependent upon multiple factors and a variety of risks, the contents of the said advertisements which may be applicable under extreme or exceptional scenarios would make a large number of prospective customers vulnerable to wrong understanding.”
Another key finding of IRDAI is highlighting features which are not part of insurance policy. IRDAI said that a few companies enter into service agreement with motor workshops to offer free pick up and drop, body wash, interior cleaning and so on, which are not part of the original policy document.
“While the bundling of these facilities with insurance is left to the motor service providers, the general insurers issuing advertisements on the said services, projecting them as benefits provided within the insurance cover is unacceptable. The main objective of service agreements with motor garages/workshops shall only be providing insurance services for claims of accident vehicles and it cannot arbitrarily expand to include scope of services which are not relevant for insurance claims,” said IRDAI.
Overall, the insurance regulator has given insurers these two instructions:
- Discontinue advertisement of services not related to insurance claims
- Stop displaying deep discounts or comparison of premium rates