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Regulator warns against misleading advertisements by vehicle insurers

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India’s insurance regulator Insurance Regulatory & Development Authority of India (IRDAI) has again cracked down on general insurers on misleading advertisements and directed them to desist from taking vehicle owners for a ride.

In a circular to the general insures, the IRDAI has asked the insurers to discontinue the advertisements in respect of the services not related to insurance claims provided by motor garages/workshops, to stop displaying discounts with reference to erstwhile tariff/premium rates, and stop displaying of discounts/savings in premium applicable only under extreme or exceptional scenarios as examples.

According to the IRDAI, general insurers issuing advertisements on free vehicle pick up and drop, body wash, interior cleaning, and others are not related to servicing of claims and should not be done.

The regulator also said perusal of some advertisements of general insurers showing discounts and savings in premium can be achieved only in extreme or exceptional scenarios. It said such advertisements make prospective policyholders vulnerable for wrong understanding.

In fact, the regulator issued such warning last year also.

In order to ensure that insurers and intermediaries adopt fair, honest and transparent practices while issuing advertisements and avoid practices that tend to impair the confidence of the public, the insurance regulator has issued the Insurance Regulatory and Development Authority of India (Insurance Advertisements and Disclosure) Regulations, 2021. Insurers and their intermediaries will have to ensure that advertisements are relevant, fair and in simple language which can enable people to take informed decisions.

The regulator had said evolutionary trends coupled with technological developments have changed the medium of advertising necessitating the review of existing advertisement regulations. The IRDAI (Insurance Advertisements and Disclosure) Regulations, 2000 were notified in 2000. Two minor amendments were done in 2010 and 2015. Transparent practices
An advertisement will be treated as unfair or misleading if it makes claims beyond the ability of the policy to deliver, describes benefits that do not match the policy provisions and uses words or phrases in a way which hides or underplays the risks inherent in the policy. An advertisement will be labeled as misleading if it omits to disclose or discloses insufficiently, important exclusions, limitations and conditions of the policy; illustrates future benefits on assumptions which are not realistic nor realisable in the light of the insurer’s current performance; or deviates from the stipulation by the authority through regulatory provisions.

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