The Insurance Regulatory and Development Authority (Irda) has
issued guidelines for distance marketing, prohibiting the sale of high-value unit-linked insurance products (Ulips) on telephone.
The new norms ban life insurance companies from selling Ulips with annual premiums exceeding Rs 50,000 for non-single premium policies and Rs 1 lakh for single premium polices, through telemarketing. The new norms will come into effect from October 1.
"Insurers shall not solicit Ulips of non-single premium type for annualised premiums exceeding Rs 50,000 over telephonic mode (voice as well as SMS). Single premium Ulips shall not be solicited for a premium of more than Rs 1 lakh over telephonic mode," Irda said in a notification.
Irda also barred life insurers from soliciting and selling variable insurance products over the distance marketing mode. Variable insurance policies give the customer an option to invest the bulk of the premium in one or more separate investment instruments, including in fixed-income investments, stocks, mutual funds, bonds and money market funds based on risk profile.
 LAYING DOWN THE RULES
- The new norms ban life insurance cos from selling Ulips with annual premiums exceeding Rs 50,000 for nonsingle premium policies and Rs 1 lakh for single premium polices via telemarketing
- Irda also barred life insurers from soliciting & selling variable insurance over the distance marketing mode
- According to the new norms distance marketing now includes solicitation (including lead generation) & sale of insurance products through voice mode, which includes telephone-calling; short messaging service (SMS); electronic mode which includes e-mail, Internet and interactive television (DTH); physical mode, which includes direct postal mail and newspaper & magazine inserts; and solicitation through any means of communication other than in person
- For the purpose of solicitation of insurance business via distance marketing, brokers may engage trained employees on their rolls, specified persons of corporate agents or telemarketers
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Responding to a query, Puneet Nanda, executive director of ICICI Prudential Life Insurance Company said, "These are a very good set of norms. There was a lot of ambiguity on distance marketing earlier. These norms have brought clarity on the process and use of distance marketing."
Distance marketing, according to the new norms, includes solicitation (including lead generation) and sale of insurance products through voice mode, which includes telephone-calling; short messaging service (SMS); electronic mode which includes email, Internet and interactive television (DTH); physical mode, which includes direct postal mail and newspaper & magazine inserts; and solicitation through any means of communication other than in person.
"Mostly channels like agents and bancassurance were being used earlier for business. The new norms have brought clarity on the use of another important channel, besides specifying safety mechanisms for customers. As such they are expected to benefit the industry and the customers alike," Nanda added.
The norms cover distance marketing activities of insurers, brokers and corporate agents (with specific approval of insurers) at the stages, including offer, negotiation and conclusion of sale.
For the purpose of solicitation of insurance business through distance marketing, insurers / brokers may engage trained employees on their rolls, specified persons of corporate agents or telemarketers. However, insurers/ brokers as the case may be, would be responsible for all acts of commission and omission of the persons deployed on their behalf, the new norms specified.
Insurers have to identify the proposals procured by brokers over the distance mode and obtain all relevant records. Insurers shall produce such records before Irda in case of dispute involving violation of breach of conduct by the broker, the new norms specified, firmly keeping the onus of proof on the insurers.
To ensure the facts are not misrepresented, the norms proposed that insurers/ brokers should prepare standardised scripts for presentation of benefits, features and disclosures.
Courtesy: Mail Today 
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