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In a circular, IRDAI has asked life insurance companies not to market ULIPs and index linked products as investment products.
Instead, the regulator has directed insurers to issue warning statements highlighting risk factors associated with linked products. Also, insurers will have to ensure that policyholders know that ULIPs do not guarantee the future prospects or returns.
Advertisement or promotional material related to ULIPs and index linked products should also carry a disclaimer which reads like this, ‘Please know the associated risks and the applicable charges from your insurance agents or intermediary or policy document issued by the insurance company.’
In addition, insurers cannot compare linked products offered by other insurers with their funds.
IRDAI has also clarified that such an advertisement cannot mention any rating or ranking.
The insurance regulator has also made more changes to the existing regulations. Here are the other key announcements:
- Insurers cannot compare rates and discounts in general insurance products
- Insurers cannot exaggerate the benefits of the products
- Insurers to set up online mechanism for grievance redressal and strive to move towards zero grievances
- The board of insurers or a senior level officer of the distribution channel will have to examine and approve the advertisements to ensure that they are true and not misleading
- Insurance should open offices at remote locations to increase the penetration of insurance
- Insurers can outsource some of their activities only if it makes sense economically
- Insurers to facilitate information on unclaimed amount on Bima Bharosa, a portal that will reflect details of unclaimed amount
Rakesh Jain, CEO, Reliance General Insurance said, “A key feature in the circular is that grievance redressal systems will be implemented so that customers can share their experiences on how their concerns are being addressed. These grievances will be recorded on Bima Bharosa, and they can be in any form, like an email, call recording, courier, etc., as it will help the insurers buckle up and ensure their grievance officers are helping customers the right way. The circular mandates a tech-based grievance redressal system ensuring swift and efficient resolutions, aiming towards zero grievances.”
Nitin Deo, CTO Strategy, Zuno General Insurance said, “The recent insurance reforms are a significant step towards empowering the policyholder. By implementing a tech-driven grievance redressal system, ensuring transparency in advertisements, and adopting a 'phygital' (physical and digital approach) approach to reach remote areas, these reforms aim to create a more accessible and trustworthy insurance landscape."
