Page 8 - Insurance Times November 2019

IRDAI levied Rs 15 lakh IRDAI issues updated norms on advertising rules for in-

penalty on Shriram surers
The IRDAI has recently updated the restrictions placed on advertising of insur-
Transport Finance
ance policies and the advertising rules that insurers
IRDAI has levied a fine of Rs 15 lakh have to follow to safeguard consumer interests. The
on Shriram rules are as follows: Wherever guaranteed returns are
Transport offered the conditions attached must be clearly men-
F inance tioned; Text spelling out the conditions related to guar-
Company anteed returns must be at least 50% of the text describing the guarantee; Asset
for selling mix of ULIP funds must be disclosed half yearly; Insurers cannot claim to hold
insurance a particular rank in the market. The aim of these restrictions is to ensure that
policies in violation of norms. The customers should not get hoodwinked by aggressive advertising - whether done
IRDAI stated Shriram Transport Fi- through television, telephone calls or through the internet - by insurers.
nance as a corporate agent (CA)
engaged persons other than speci- In the updated master circular on insurance advertisements, IRDAI states, "The
fied persons (SPs) to procure busi- insurers are expected to adopt fair, honest and transparent practices in the
ness. market-place and avoid practices that tend to impair the confidence of the pub-
lic. As it may be difficult for the public to understand and evaluate the inherent
Between April 14, 2015 to March details in the various insurance products, it is of paramount importance that the
28, 2017, the matter pertains to sell- publicity material is relevant, fair and in simple language enabling informed de-
ing of 983 policies by a specified cision making about whether or not to buy a specific insurance product."
person (SP) of the company, even as
the said person was relieved from The original master circular detailing the rules to be followed in insurance ad-
employment on April 13, 2015. vertisements was issued on August 20, 2015. Insurance buyers need to be
aware that insurance companies are required to follow certain norms in ad-
The proposal forms, in many cases, vertising their policies.
did not contain the details of inter-
mediary/SP and signature of SP, IRDAI sets up working group to review title insurance
IRDAI said in an order, adding the structure
firm has violated various clauses of
Schedule-III under Regulation 26 of A working group has been constituted by IRDAI to
IRDAI (Registration of Corporate revisit the product structure of title insurance, de-
Agents) Regulations, 2015. velop a standard product and recommend mea-
sures to spur demand for the product. The decision
Moreover, among the 907 cases of
comes in the backdrop of a less-than-desired response to title insurance prod-
endorsement (as declared by the
ucts. “The number of title insurance policies sold is minimal despite availability
CA), 277 policies were cancelled in- for the last one and half years and the obligation cast under the Real Estate (Regu-
stead of being endorsed, it added.
lation and Development) Act, 2016 upon promoter/developers to obtain the said
"Cancellation of about 30% of the policy,” said the IRDAI order, while constituting a 12-member working group.
policies claimed to have been solic- There are very few general insurers that offer title insurances and their prod-
ited by the said SP before his reliev-
uct features vary in policy terms and conditions and scope of coverage depend-
ing date, leads to the inevitable con-
ing on the support received from their reinsurers. While stating this, IRDAI said
clusion of mis-selling and use of un-
the feedback received from the Government of India revealed that stakehold-
authorized/untrained persons by ers, especially developers associations, had flagged the need for standardisation
the CA to procure business," IRDAI in title insurance products.
said.
The working group has been formed with a deadline of three months to submit
As directed under the respective the report. Apart from developing a standard product and coming out with rec-
charge, the penalty of Rs 15,00,000
ommendations to spur demand, the group will examine the legal and regulatory
shall be remitted by the CA within a framework in place and its impact on the marketability of title insurance; study
period of 15 days from the date of
the structure of such products available and analyse reasons for sluggish demand;
receipt of this order, IRDAI added.
and suggest augmentation of reinsurance capacity in the domestic market.
8 The Insurance Times, November 2019