May 1, 2014
India’s insurance regulator has been cracking down on insurance companies which highlight their market rankings in advertisements. Insurers have been sent notices by the Insurance Regulatory and Development Authority (IRDA) to remove statements in their ads that made claims about their position in the market with respect to premiums and claim settlements.
The insurance companies have also been advised to follow the code of conduct prescribed by the Advertising Standards Council of India, reported the Business Standard.
IRDA regulations bar insurance companies from producing ads which might be misleading or which make unfair comparisons between companies and their products. The companies have also been advised to follow the code of conduct prescribed by the Advertising Standards Council of India (ASCI).
“No claim of ranking by an insurance company, as regards its position in the insurance market, based on any criteria (like premium income or number of policies or branches or claims settlements etc) is permissible in any of the advertisements,” the regulations stipulate. For instance, an insurer cannot say in its ads that it is the No.1 insurer in the market or settles claims in the quickest time.
A senior executive of a private non-life insurer said: “Though the ads showing the ranking of an insurer may be factually correct, since the ranking is based on data and figures given out by IRDA, the regulator is ensuring that no such rankings are mentioned in public ads. This is to make sure that prospective and current policyholders do not make any false assumptions based on these claims.”
However, the ads can contain ratings given by external agencies. Any claim of rating/award should be based only on those declared by entities which are independent of the insurance company and its affiliates, said IRDA. However, an insurance company and its affiliates should not procure services from such independent entities so as to get a rating/award.
An IRDA official explained that customers might not be fully aware of the exact criteria used by the company in making claims about its rankings. It would thus not be fair to publish such ads in the market.