What IRDAI’s new regulations could mean for insurance advertising

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Industry watchers note that the new rulings, if implemented fairly, could go a long way in facilitating fair and credible financial advertising

The Insurance Regulatory and Development Authority of India (IRDAI) has proposed changes in insurance advertising regulations. The body is seeking to come out with new advertisement regulations and has invited comments from stakeholders on the exposure draft by November 10. According to the draft, misleading advertisements will include those which fail to disclose or disclose insufficiently important exclusions, limitations and conditions of the contract. Industry watchers weigh in on how the new rulings could impact the advertising of players in the category and should it come to force.

Manisha Kapoor, Secretary General of The Advertising Standards Council of India (ASCI), said that the body has also noticed misleading ad claims from the financial sector, both from consumers as well as our own ongoing monitoring service. ”IRDAI, besides having its own specific advertising guidelines for the insurance sector, also requires insurance advertisements to comply with the ASCI Code. The ASCI Code, among other clauses, states that ‘advertisements shall neither distort facts nor mislead the consumers by means of implications or omissions’. And ‘advertisements shall not be so framed as to abuse the trust of consumers or exploit their lack of experience or knowledge.’  We have reviewed the updated draft guidelines and we are in touch with IRDAI to provide our inputs to strengthen the cause of consumer protection,” Kapoor said.

Another objective of the proposed regulation is to ensure that the publicity material is relevant, fair and in simple language, enabling informed decision making.

Gopa Kumar, COO, Isobar India, feels that it is definitely a step in the right direction as it will put the onus on the insurance providers to come out clean and ensure that all its communications are made very clear, fair, and are not at all misleading. “This will also help provide clarity to the consumer who intends to purchase an insurance product. I am sure there would also be some guidelines on how it will have to be represented in the advertising. From a communication standpoint, it will push the marketers to be as transparent and talk about the benefits of the products so that consumers can make an informed choice without the underlying fear of misleading claims,” he said.

While issuing the exposure draft, IRDAI said evolutionary trends in advertisements in the last 20 years, coupled with technological developments which have changed the medium of advertising, are necessitating the review of existing advertisements regulations.

According to Ramanuj Shastry, Co-Founder, Infectious Advertising, the new ruling of IRDAI is an important check and will go a long way in creating credible insurance communication.

“In an ‘under-insured’ country like India, all insurance companies have the shared burden of growing the category. It is paramount in this scenario to bolster the ‘trust-quotient’. Failure to ‘disclose or sufficiently disclose important exclusions, limitations and conditions’ will do great harm to public perception of insurance sector in general and the insurer in particular,” Shastry said.

IRDAI (Insurance Advertisements and Disclosure) Regulations, 2000 were notified in 2000. Two minor amendments were effected in 2010 and 2015, respectively.

Jigar Fernandes, founder, tiqui-taka, feels that retrospective prohibitive fines should be the order of the day including a ban on media time for a while, as in the absence of this, these initiatives are just good optics and little else. “It’s always a welcome sign that misleading messages are shut out. But what exactly construes a misleading ad has always been the bone of contention where legal brains engage in a give and take of complex sounding jargons for a while. In the meantime the said ad runs as per its media plan across the country,” Fernandes noted.

As per the draft, all insurance advertisements should ensure that “communications are clear, fair and not misleading whatever be the mode of communication. They should use material and design (including paper size, colour, font type and font size, tone and volume) to present the information legibly and in an accessible manner,” among other things for clarity.

Prathap Suthan, Managing Partner and Chief Creative Officer (CCO) of Bang In The Middle, feels that it’s going to be very interesting to see how clients and agencies will pick holes and make merry if these guidelines get nailed to the soft boards. “Advertising being the one place other than courtrooms where creative answers, inventive detours, and lateral interpretations always rule. Overall, it’s going to be fun and harvest time for lawyers. Because just about anything that will be written in the guidelines can be questioned. And everything, without fail, will and can be cleverly misinterpreted. I am not saying that celebrities shouldn’t be careful and should not endorse outlandish claims and promises. But advertising in its very construct is replete with exaggeration and hyperbole. After all, people look at and consider advertising as entertainment. They are not as dumb as we want to believe,” he said.

However Suthan observed, “I mean how on earth does one, in the attempt to deliver an honest and truthful advertisement, ever decide or pin down the legal ambit and limits of exaggeration? Especially for products that don’t and can’t have a typical set of established scientific parameters, either to adhere to or even benchmark. Imagination is the domain that’s being held to ransom here. How will one gauge these? How do you measure the inward radiance, happiness, and even the gratitude of watching a playful puppy tumbling around in my lawn? Unless one wants advertising as a business to be now created by legal departments that will end up with 90% of the space reserved for dreary T&C. I don’t think even the dullest of consumers would look forward to boring legalese for their 30 seconds of escapism. “

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Misbaah Mansuri

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