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The entity will look at implementing the standards set down by the insurance watchdog, by the second half of 2010
The Advertising Standards Council of India (ASCI) has plans to include guidelines for the insurance and financial sectors soon. Considering that there have been many complaints filed against insurance advertisements, the council aims at modifying the guidelines further. Alan Joseph Collaco, secretary general of ASCI said, “We will do it (the modifications) once we get a consensus from insurance companies, probably around the second half of 2010. At present, the percentage of complaints received (concerning insurance companies) is 10% (of the total number of complaints being received). However, more insurance companies are advertising with every passing day.”
However, the implementation isn’t likely to happen immediately but is on the cards. Mr Collaco further added that the complaints received by the council are on these lines: “In one advertisement, fixed deposits are compared rather unfairly with insurance. In another advertisement, insurance is shown as a route to fulfil your child’s dreams.”
There are some minimum standards advertisers and brands need to adhere to, which is in compliance with the IRDA (Insurance Advertisements and Disclosure) Regulations, 2000 referred to as ‘Advertisement Regulations’ and the code of conduct formulated by ASCI and any other regulations as applicable.
Clyton Fernandes, a research analyst (banking and financial services) with Anand Rathi Financial Services, believes that it is a positive move for the insurance industry, “It is good and more about awareness, more than anything else. At least it will make insurance and financial companies more cautious; people are often mislead about products. This might not be good news for financial companies in the beginning as it will impact their profit margins, but it will be fruitful for customers as they will get a better perspective about different products.”
SBI Life Insurance is in favour of this move initiated by the advertising council. Chandramohan Mehra, head (Brand and Communications), SBI Life Insurance told Moneylife, “Any move that is in the interest of the customers will always be welcomed. The basic ingredient to keep the customers’ trust intact is to initiate honest communication.”
In the month of March 2010, the council had implemented specific guidelines on the auto and food & beverage sectors. Mr Collaco had said, “ASCI realises that cutthroat competition among products and the need for uniqueness can sometimes lead to senseless exaggeration and depiction of unsafe practices.”
ASCI is a self-regulatory voluntary union of the advertising industry that plays the role of a body that receives complaints from consumers and the industry with the help of its Consumer Complaints Council (CCC), against advertisements which are considered false, misleading, indecent, illegal, leading to unsafe practices, or unfair to competition. ASCI had upheld complaints against six advertisements in February. These advertisements include brands like Dabur Chyawan Junior, Shanti Badam Amla Hair Oil, Maruti SX4, IMS CAT Approach Program, Tata AIG Insurance, and Mahindra Flyte Power Scooter. More documents on complaints are expected in the near future.
Only three insurance broker licenses were added in 2009 while no licenses have been granted this year yet
According to data available on the Insurance Regulatory & Development Authority (IRDA) website, no new insurance broker licenses have been granted this year. In the year 2009, only three new licenses were awarded.
“The process is time-consuming. It’s not a matter of not issuing licenses but it’s a matter of not renewing them. In fact, IRDA has gone on record to say that brokers are not responding fast enough. New applications have probably trickled down to nothing because the viability of a direct broker has come into serious difficulty,” said Fali A Poncha, chairman, International Reinsurance and Insurance Consultancy and Broking Services.
More than 50 broker licenses have already expired and are still under renewal scrutiny. Some of these insurance broker licenses had been cancelled, barred, or suspended by IRDA in September 2009. Seven licenses were given an extension of six months—which have already expired between June-November 2009—while six were given an extension of one year out of which four have already expired and two are due to expire in the next few months as on 30 September 2009. A total of 15 licenses have been cancelled by the regulator since 2005, out of which five were cancelled in the year 2008, one in 2009, five in 2007, three in 2006, and one in 2005.
Pritam Ins. Brokers Pvt Ltd, a Delhi-based direct broker, was refused renewal of its license which expired on 18 August 2008.
“The effort of procuring and servicing the business has been exhaustive. There is a 60%-90% discount range and the earnings have frozen on the basis of premium. It’s not an attractive proposition for people to invest in infrastructure and become a broker. There’s a huge reduction in premium rate across the board. They are renewing, but the process takes a lot of time in the procedure, inquiries, and answers from brokers etc,” added Mr Poncha.