Insurance Regulatory and Development Authority of India (IRDAI) has imposed Rs.1 crore & cautioned over non-compliance of IRDA (Insurance Advertisements and Disclosure) Regulations, 2000.
IRDAI had issued a show cause notice to Acko General Insurance Limited (AGIL) on 25th July 2019 over advertisements released by AGIL, where IRDAI observed violation of provisions of IRDA Regulations and Master Circular under the act.
RDAI has alleged 4 charges under the norms where AGIL was found non-compliant. First, Acko failed to file the advertisement within 7 days of its release, where advertisement was carried on motor insurance with quick ride and advertisement showing ‘Acko General Insurance (now officially 2nd best in the world)
AGIL in its submission acknowledged there were lapses on their part for not filing the advertisements and were under impression as there was no need to file the news content as advertisement. AGIL also stated, Quick Ride added conditions and issued some part of the advertisement without informing AGIL and have snapped ties with Quick Ride for the lapse. The regulator cautioned and directed to adhere to the IRDA Regulations, 2000.
Second, the insurer had violated the IRDA regulations, 2000 by advertising the premium of Rs. 2299/- on the advertisement with Quick Ride. Acko in its submission over the second charge said, advertisements issued for Rs. 2299/- shown with photos of big sedan cars (engine over 1000cc) were for illustration purpose to generate curiosity about its product offerings and company. AGIL had used an Hyundai i10 car image in the advertisement.
As per IRDAI norms, the minimum third party premium should be Rs. 2,863 for cars with engine above 1000CC.
IRDAI said, “The Insurer in their reply admitted the mistake that for Hyundai i10, it came out to be incorrect as Hyundai has not launched i10 less than 1000CC. Hence, the advertisement is unfair or misleading as defined under Regulation 2(d) (iii) of said Regulations and it gives information in a misleading way and the assumptions are not as per the type of private car depicted.”
IRDAI in its order said, “As per the data submitted by AGIL, the advertisement on Hyundai i10 was in display in digital medium for more than hundred days from the date of release of advertisement. Considering the release of misleading nature of advertisement, in exercise of powers vested in the Authority under section 102 of Insurance Act, 1938 and amendments made thereto, a penalty of Rs. 1,00,00,000 (Rupees One Crore Only) is levied on the Insurer for the violation period.”
On third charge, the insurer had failed to enter details of Amazon in their advertisement application filed under Amazon exclusive campaign.
As per IRDAI norms, branding with third parties can be used on any advertisement of insurer only if it does not urge the prospect of policyholder to purchase, renew, increase, retain or modify an insurance policy. IRDAI found the advertisement with Amazon showed how it works including the purchase and crediting of cash back by Amazon which nudges the prospect or a policyholder to purchase.
IRDAI has directed the insurer to exercise care and diligence in complying with IRDA Regulations, 2000.Lastly, IRDAI observed AGIL had violated the norms by classifying itself as (now officially 2nd best in world), as per the norms ““No claim of ranking by an insurance company, as regards its position in the insurance market, based on any criteria is permissible in any of the advertisement”.
Acko said, the post was simply shared as published by the an independent agency called Insurance Post, UK and they had no affiliation with the entity, insurer assured that there was no intent to mislead the prospective customers with the content. The insurer has withdrawn the said advertisement and has been cautioned by IRDAI to exercise care and diligence in complying with the IRDA Regulations, 2000.
Acko Insurance has been asked to submit an Action Taken Report on given directions within 90 days from the order dated 24th January 2020.