Tuesday, Jul 05, 2022
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Avoid Misleading Motor Insurance Advertisements, IRDAI Tells General Insurers

IRDAI has said that general insurers issuing advertisements on the motor vehicle services, projecting them as benefits provided within the insurance cover, is unacceptable

The Insurance Regulatory and Development Authority of India has issued tight guidelines to all general insurers prohibiting the publication of deceptive insurance marketing.

The Insurance Regulatory and Development Authority of India has issued strict guidelines to all general insurers to refrain from publishing misleading insurance advertisements. It has said that other than the standalone health insurers and specialised insurers, all general insurers must abide by certain guidelines.

General insurance companies have service agreements with motor workshops/garages for the purpose of providing motor insurance claims towards repairs and damages sustained in accidents. 

IRDAI said that it has come to its notice that the service agreements, in addition to claim services, extend certain assistance services not related to insurance claims, such as free pick up and drop of vehicle, body wash, interior cleaning, inspection of vehicle etc.

The IRDAI has now said that while the bundling of the above facilities with insurance is left to the motor service providers, the general insurers issuing advertisements on the said services, projecting them as benefits provided within the insurance cover, is unacceptable. 

The main objective of service agreements with motor garages/workshops shall only be with providing insurance services for claims of accident vehicles, and it cannot arbitrarily expand to include scope of services which are not relevant for insurance claims, IRDAI said in a circular.

It said that in view of these developments, the insurers have been advised to discontinue the advertisements in respect of the services not related to insurance claims as may be provided by motor garages/workshops.

Insurers should also stop displaying discounts with reference or comparison to rates of erstwhile tariff.

Further, insurers must ensure that the discounts and saving in the premium which may be applicable only under extreme or exceptional scenarios are not to be displayed as examples.

“A perusal of advertisements issued by a few general insurers showing discounts up to certain percentage, saving in the premium etc., and the illustrations provided therein, reveals that the features or benefits are applicable under extreme or exceptional scenarios as defined under regulation 3 (g) (xiv) of IRDAI (Insurance Advertisements and Disclosure) Regulations, 2021 dated April 7, 2021. The discounts in certain advertisements are not shown objectively on filed rates, but expressed in comparison to rates of erstwhile tariff. This is not to be done,” the circular said.

“Considering that the quoting of motor premium rates is dependent upon multiple factors and a variety of risks, the contents of the said advertisements which may be applicable under extreme or exceptional scenarios would make a large number of prospective customers vulnerable to wrong understanding,” it added. 

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