IRDAI has come out with a master circular in which it has tightened the advertising norms of insurance companies and intermediaries.
The insurance regulator has improved disclosure norms and restricted the use of awards of ratings. Besides, IRDAI has asked insurers not to advertise the tax benefits of a policy without stating that such benefits are subject to changes in the tax laws.
In order to increase the transparency, the insurance regulator has mandated insurance companies to clearly mention ‘Conditions Apply’ before guaranteeing any benefit in a policy. Also, insurers are required to mention the given mandatory disclosure, ‘For more details on risk factors, terms and conditions please read sales brochure carefully before concluding a sale’ while advertising their products.
The insurance regulator has mandated insurance companies to give a disclaimer that past performance is not an indication of future performance while advertising on the basis of historical performance of any policy.
Also, IRDAI has restricted insurers on use of ratings, ranking and awards. Any claim of rating/award should come from independent agency. Insurers are required to disclose source of such ratings.
Both insurance companies and agents/brokers have to disclose their license number in sales material.
In ULIPs, insurers are required to disclose the quantum of amount which will go towards investment component. Typically, ULIPs premium have three components, mortality charges, expenses and investment. In case of 0% allocation scheme, insurance companies will be required to illustrate policyholders and get their signature on the given text, ‘I also understand that no part of my first year premium will be invested in unit linked investment funds.” Similarly, regular ULIPs are required to use the disclaimer, ‘I also understand that whilst _% of my first year premium will be invested in unit linked investment funds there are charges during the first policy year as given in the benefit illustration.’