Insurance Regulatory and Development Authority (IRDA) has made a Regulation known as "Insurance Regulatory and Development Authority (Insurance Advertisements and Disclosure) Regulations 2000.  Probably this is the first regulation initiated by any Authority in India to streamline a transparent communication.

This Regulation, regulates the communication through mediums like Newspapers, magazines, bill boards, hoardings, panels, radio, TV, representation by intermediaries, leaflets, descriptive literature, circulars, sales aids flyers, illustrations form letters, business cards, videos, faxes and all other communications with a prospect or policy holders urging him to purchase, renew, increase, retain or modify a policy of insurance

Interestingly, the sales talks, websites, e mails, portals, telephone solicitations also are governed by this Regulation.  This regulation prohibits "unfair or misleading advertisement".  A 'compliance officer' is nominated by the Company and he would be accountable to IRDA for compliance of the regulation.

While we congratulate and appreciate IRDA for bringing out such a Regulation, we also urge the other Regulators like Reserve Bank, SEBI, TRAI, etc. to come out with such regulations to have more transparent communication in other areas also.

After the opening up of Insurance Industry, more number of players have started entering the market with more of life and non-life insurance products.  As long as the state owned Insurance companies were the only players in the market, the customers were not seriously concerned with the products and the stability of the organisation.   The entry of new players has triggered the competition and the prospective customers are flooded with various product ranges.  Even though many of the leading Indian Business houses have tied up with one or other International Insurance Companies, very limited information is available about the financial standings and professional competency of the new companies. 

We are presently having three generation of Insurance players in India - Postal life insurance with more than 150 years of standing as 'grand mother of insurance', LIC of India with nearly 50 years of standing as 'mother of insurance" and the new generation companies as "cub insurers" - Now a time has come that cub, mother and grandmother are competing with each other and innovating more avenues for Insurance.  The entry of 'cubs' has made the mother and grandmother more vibrant. 

In this scenario, I would be happy if the IRDA and the enlightened audience here comprising of Insurers, consumers and Media could share their views to what extent the transparency could be brought not only in the matter of sale of products, but also in the financial aspects and professional competency of the Insurers.   With the entry of brokers shortly, the Insurance companies themselves in their own interest are required to be more transparent about their functioning to enable the customers to decide the Insurers. 

Even though, IRDA has brought out a laudable Regulation for communication, the awareness level is very low even amongst the Insurance officials and the public.  I donot know much about the monitoring aspect of this Regulation.  But however, I suggest an Advisory Committee be set up at IRDA level to review and suggest further improvements.  The Committee may consist of Consumer representatives, Economic Journalists, Advertising professionals and Public Relations professionals. 

I have also studied all the websites of the Insurance Companies.  They lack lot of information.  The Insurance business is being done through intermediaries, unlike Banks who are directly dealing with customers.  Hence, there is a necessity of the public to be aware of the location and functionaries at various centres of the Insurance companies.  The websites should invariably contain these details with names of the Executives, phone numbers, postal address and E-mail addresses, etc of all their offices.   

There should be more transparency during the 'settlement of claim'.  The details like the information required for making claim, the authorities concerned, procedures  to be complied with, probable duration of settlement of claim may also be furnished in the website, so that the customers are not put to frequent disturbances and inconvenience.

IRDA website provides the contact addresses of all the Insurance Companies permitted by them.  Very unfortunately, the e-mail IDs provided by some of these companies in the IRDA website itself are restricted e-mail IDs and not listed in the public domain.  That means the mails addressed to such  e-mails would get returned.  I suggest these Insurance Companies should provide correct information to IRDA to enable them to publish properly.  I even suggest that a provision be made in the website of IRDA itself that any public can communicate their grievance against any Insurance Company to IRDA directly.  This would make all the Insurance Companies to function more transparently.  One IRDA member may be nominated to look into such grievances.  The leaflets of the Insurance companies are also to be made more customers friendly in a simple language.  When we wanted to study the leaflets, only very few companies responded by sending their leaflets.  

When the competition has increased between the new players and the old players, it is also sad that the Government has not appointed Chairmen for three Insurance Companies in the Public Sector for a long time and resort to adhocism.   

While IRDA has limited the regulation to the communications relating the sale or renewal of policies, with the increased competitive environment amongst the players there is an urgent need for the transparency in financial strengths and professional competency of all the companies and this may also be incorporated in the Regulation.   The Foundation suggests to IRDA that a workshop be held for the 'compliance officers' notified under the Regulation to apprise them of the various aspects of transparency. Periodical review meeting of 'compliance officers' may also be held once in six months to improve further the concept of transparency. 

By K. Srinivasan, Founder and Managing Trustee, Prime Point Foundation, Old No 8 New No 14, Wason Street, T Nagar, Chennai 600017 Phone 8142005 / 8144285  E Mail  :  prpoint@vsnl.com      Website  :  www.primepointfoundation.org