COMPLIANCES APPLICABLE IN RELATION TO OFFERING OF INSURANCE PRODUCTS

A. Key compliances applicable to the Insurer under the Insurance Act

1.1 Registration of Insurer

The Insurance Act is the principal legislation that governs the business of insurance. It requires any person carrying on any class of insurance business in India to obtain a certificate of registration for the particular class of insurance business undertaken by it.

1.2 Payment of remuneration / commission / reward to insurance intermediaries

Insurers are required to abstain from excessive amounts of remuneration to insurance intermediaries, by way of commission or otherwise. In this regard, the IRDAI (Payment of commission or remuneration or reward to insurance agents and insurance intermediaries) Regulations, 2016 (“IRDAI Commission Regulations”) mandates Insurers to have a written policy for payment of commission or remuneration or reward to insurance agents and insurance intermediaries, which must be approved by the board of the company. Where the Insurer has paid any remuneration / commission / reward to an insurance intermediary, the Insurer must not pay any commission to an insurance agent on the same insurance policy. The maximum remuneration that can be paid by the Insurer to the insurance intermediaries is specified in the Schedules to the IRDAI Commission Regulations.

1.3 Assuming of risk by Insurer

The Insurer shall assume any risk in respect of any insurance business (on which premium is not ordinarily payable outside India), only upon the premium payable is received by the Insurer or is guaranteed or unless and until deposit of such amount is made in advance. In case of risks for which premium can be ascertained in advance, the risk may be assumed not earlier than the date on which the premium has been paid in cash or by cheque to the Insurer. Any refund of premium which may become due to an insured on account of the cancellation of a policy or alteration in its terms and conditions or otherwise shall be paid by the Insurer directly to the insured, in the manner as specified in the Insurance Act.

1.4 Protection of policyholders’ interests

Insurers are subject to the specific compliances and obligations prescribed under the IRDAI Master Circular on Protection of Interests of Policyholders dated 5 September 2024 (“Policyholders Master Circulars”). Such obligations relate to, inter alia, (a) activities prior to sale of insurance products, (b) proposal for sale of insurance policies, (c) issuance of insurance policies, (d) servicing of policyholders and settlement of claims, (e) portability of health insurance policies, etc. The Policy Holders Master Circular, through its schedules, also provides for (a) form and manner of policy documents and benefits illustrations, (b) contents of insurance policies, and (c) customer information sheet (“CIS”).

B. Key Compliances applicable to Insurance Brokers

2.1 Registration of Insurance Brokers

Insurance Brokers are required to be registered with the IRDAI as per the Insurance Broker Regulations. In this regard, the Insurance Broker Regulation specifies the form and manner of submission of application for grant of certificate of registration.

2.2 Display of details in correspondences

Every Insurance Broker is required to display, in all their correspondences with all stakeholders, their name registered with IRDAI, address of the registered and corporate office, IRDAI registration number, category for which Insurance Broker is registered, and validity period of registration.

2.3 Remuneration and reward

For direct insurance business, payment of remuneration and / or reward to the Insurance Broker shall be as per the limits specified in the IRDAI Commission Regulations.

2.4 Risk management services

Insurance Brokers may charge the client fee for the services rendered by them to the client for risk management services or other similar services as per the functions defined under the Insurance Broker Regulations. The Insurance Broker can undertake this activity only for commercial risks based on the written confirmation from client for those fees. However, the Insurance Broker cannot receive both the remuneration and reward as stipulated under the IRDAI Commission Regulations, and fees for the same risk management services. The Insurance Broker shall obtain a written mandate from the client to offer risk management services and shall keep a record of the risk management services offered to the client which will include details such as name of the client, place of risk, nature and type of risk management services undertaken, amount of fee charged from the client, basis of fee charged, etc.

2.5 Claim consultancy services

Insurance Brokers may undertake claims consultancy only for commercial lines of general insurance business, subject to the conditions as prescribed under Regulations 28 of the Insurance Broker Regulations.

2.6 Sale of insurance products through online channels, tele-marketing and distance marketing

Insurance Brokers may enter into an agreement with Insurers for sale of insurance products online by linking to the web portals of the Insurers, or through tele-marketing and other distance marketing activities. The sale of insurance products through such online or telemarketing channels by Insurance Brokers shall be as per Web Aggregator Regulations and Guidelines on Insurance e-commerce issued by IRDAI.

2.7 Functions of a direct Insurance Broker

Functions of a direct Insurance Broker acting as a Seller App would include, inter alia, the following:

• (a) Assisting the insurer by appraising on the client's business and underwriting information;

• (b) Submitting quotation received from Insurer/s for consideration of a client;

• (c) Rendering advice on appropriate insurance cover and terms and acting promptly on instructions from a client and providing written acknowledgements and progress reports;

• (d) Assisting clients in paying premium under the Insurance Act;

• (e) Assisting in the negotiation of the claims; and

• (f) Assisting in opening of e-insurance accounts and assisting in issuing e-insurance policies.

2.8 Code of conduct

While acting as a Seller App and providing its services, Insurance Broker shall be required to adhere to its code of conduct, as prescribed under the Insurance Broker Regulations. The code of conduct for Insurance Broker, as provided under Schedule I – Form H of the Insurance Broker Regulations, specifies specific conduct requirements in relation to: (i) client relationship; (ii) sales practices; (iii) furnishing of information; (iv) explanation of insurance contract; (v) renewal of policies; (vi) claims by clients; (vii) receipt of complaints; (viii) documentation; (ix) advertising; (x) receipt of remuneration; and (xi) training of staff.

C. Key compliances applicable to Corporate Agents

3.1 Registration of Corporate Agents

Corporate Agents are required to be registered with the IRDAI as per the Corporate Agent Regulations. In this regard, the Corporate Agent Regulations specifies the form and manner of submission of application for grant of certificate of registration.

3.2 Arrangements with Insurers

Corporate Agents must enter into arrangements with Insurers for distribution of their products, subject to the specific conditions listed under Regulation 23 of the Corporate Agent Regulations. The minimum period of such arrangement must be for 1 year. A Corporate Agent (Life), Corporate Agent (Health), and Corporate Agent (General), may have arrangements with a maximum of 9 life Insurers, 9 health Insurers, and 9 general Insurers, respectively, to solicit, procure and service their insurance products Further, the Corporate Agent (General) shall solicit, procure and service retail lines of general insurance products and commercial lines of such Insurers having a total sum insured not exceeding INR 5 crores per risk for all insurances combined. A Corporate Agent (Composite) may have arrangements with up to 9 Insurers in each class, subject to the condition that the total number of arrangements with life, general and health Insurers, shall not exceed 27 at any point of time.

3.3 Grievance redressal

As part of the registration conditions, a Corporate Agent is required to take adequate steps for redressal of grievances of its clients within 14 days of receipt of such complaint and keep IRDAI informed about the number, nature and other particulars of the complaints received from such clients in format and manner as may be specified by IRDAI.

3.4 Prohibition of multi-level marketing

Corporate Agents are prohibited from undertaking any multi-level marketing for solicitation of insurance products.

3.5 Remuneration and reward

Payment of remuneration and receipt of remuneration by a Corporate Agent shall be as per the limits specified in the IRDAI Commission Regulations.

3.6 Conflict of interest

While soliciting and procuring the insurance business, Corporate Agents are required to comply with the following:

(a) The Corporate Agent having tie-ups with more than 1 Insurer in a particular line of business, disclose to the prospective customer the list of Insurers, with whom they have arrangements to distribute the products and provide them with the details such as scope of coverage, term of policy, premium payable, premium terms and any other information which the customer seeks on all products available with them. Further, disclose the scale of commission in respect of the insurance product offered, if asked by the prospect;

(b) Where the insurance is sold as an ancillary product along with a principal business product, the corporate agent or its shareholder or its associates shall not compel the buyer of the principal business product to necessarily buy the insurance product through it. The Principal Officer and CFO (or its equivalent) of the corporate agent shall file with the Authority a certificate in the format given in the Schedule VIII on half-yearly basis, certifying that there is no forced selling of an insurance product to any prospect.

(c) No Insurer shall require the corporate agent to insure every client with it.

3.7 Servicing of policyholders

Corporate Agent shall have the duty to service its policyholders during the entire period of contract. Servicing includes assisting in payment of premium, providing necessary assistance and guidance in the event of a claim, and providing all other services and guidance on issues which arise during the course of an insurance contract.

3.8 Sale of insurance products through tele-marketing and other distance marketing

Schedule VII of the Corporate Agent Regulations specifies the conditions to be adhered to by Corporate Agents while selling of insurance products through tele-marketing mode and other distance marketing activities. It specifies various compliances, which include, inter alia, aspects relating to (i) persons that can be engaged for solicitation; (ii) agreements between Corporate Agents and telemarketers; (iii) role of authorised verifiers; (iv) conduct in relation to sale of insurance products through distance marketing; (v) process of solicitation, including standardised script, introduction, consent, procuring prospect’s information, communication of product benefits and features; premium ceilings in case of sale of ULIPs, prohibition of sale of universal life products over telephonic mode, etc., (vi) post solicitation process, (vii) prohibition of unfair denial of insurance cover, (vii) preservation of records, (vii) verification processes to be adopted by Corporate Agents, etc.

3.9 Code of conduct

While acting as a Seller App and providing its services, Corporate Agents shall be required to adhere to its code of conduct, as prescribed under Schedule III of the Corporate Agent Regulations. The code of conduct for Corporate Agents, as provided under Schedule III of the Corporate Agent Regulations, prescribes (i) general code of conduct for Corporate Agents; and (ii) Pre-sale code of conduct; (iii) Post-sale code of conduct.

D. Key compliances applicable to Insurance Web Aggregators

4.1 Registration of Insurance Web Aggregators

Insurance Web Aggregators are required to be registered with the IRDAI as per the Web Aggregator Regulations. In this regard, the Web Aggregator Regulations specifies the form and manner of submission of application for grant of certificate of registration.

4.2 Display of details in correspondences

Insurance Web Aggregators are required to display in all its correspondences with all stakeholders its name registered with IRDAI, address of the registered and corporate office, IRDAI registration number and validity period of the registration. Insurance Web Aggregators are not permitted to use any other name in their correspondence / literature / letter heads without the prior approval of IRDAI.

4.3 Board approved policy for comparison and distribution of insurance products

Insurance Web Aggregators are required to have a Board approved policy on the manner of soliciting insurance products. The policy, amongst others, must include the approach to be followed by the Insurance Web Aggregator in having multiple tie-ups, type of products sold, grievance redressal mechanism, reporting requirements, etc.

4.4 Arrangements with Insurers

Insurance Web Aggregators must not enter into any arrangements with Insurers which are against the interests of policyholders. The details pertaining to the arrangement made by the Insurance Web Aggregators with the Insurers must adhere to the requirements specified in Form L (Arrangements with Insurers for distribution of products) of Schedule III of the Web Aggregator Regulations.

4.5 Conflict of interest

While soliciting and procuring the insurance business, Insurance Web Aggregators are required to comply with the following:

(a) The Insurance Web Aggregator having tie-ups with more than 1 Insurer in a particular line of business, shall display to the prospective customer the list of Insurers, with whom they have arrangements to distribute the products and provide them with the details such as scope of coverage, term of policy, premium payable, premium terms and any other information which the customer seeks on all products available with them;

(b) The product to be sold shall be based on the need analysis of the prospect; and

(c) No Insurance Web Aggregator shall promote or push a particular product of a particular company either through its web-site or through distance marketing approaches.

4.6 Duties and functions of Insurance Web Aggregators

Insurance Web Aggregators are required to fulfil the following duties:

(a) Display Information in their designated website pertaining to the products of Insurers who have signed agreement with the Insurance Web Aggregators, and carryout the activities for the purpose of lead generation for Insurers.

(b) Ensure that the information systems, (both hardware and software) including the aggregation website(s) / portals, Lead Management System and the data centers hosting the website(s) / Portal(s) / Lead Management System are in compliance with the generally accepted information security standards and procedures in force in India from time to time.

(c) Ensure that the leads and other data is transmitted to the Insurers and others using secured layer data encryption technologies like 128-bit encryption.

• (d) Use only RBI registered payment gateways for collection and transfer of premium to Insurers when the Insurance Web Aggregator is authorized by the Insurer to collect the premium on behalf of the Insurer.

Further, Insurance Web Aggregators are required to abstain from the following:

• (a) Display any information pertaining to products or services of other financial institutions / FMCG or any product or service on the website.

• (b) Display advertising of any sort, either pertaining to any product or service including insurance product or service, other financial products or service / or any other product or service in the Insurance Web Aggregators Website.

• (c) Operate multiple websites or tie up with other approved / unapproved / un-registered entities / websites for lead generation / comparison of product etc. Using multiple domain names or same domain names with suffixes such as .com or .in or .co.in for the primary website of the Insurance Web Aggregator used for comparison of insurance products is allowed provided the domain names of primary or secondary or product category specific websites or mobile sites are owned and registered in the name of the Insurance Web Aggregator; and the Insurance Web Aggregator shall inform IRDAI in writing about the date of registration and also date of launching of domain names of such websites or mobile sites in the application for grant of registration and thereafter within 15 days from the date of Domain Name registration and date of launching respectively in case of any change in the name(s) of the existing websites or new websites.

• (d) Operate the websites of other Financial / Commercial / marketing or sales or service entities or use other Social Media sites etc. for comparison of products etc.

• (e) Operate in any other manner for the purpose of transmitting leads to any entity engaged in insurance business except as provided under the Web Aggregator Regulations.

4.7 Display of product comparisons

Insurance Web Aggregators are required to disclose prominently on the home page, a notice that, (a) the Prospect’s / visitor’s particulars could be shared with Insurers, and (b) the information displayed on the website is of the Insurers with whom our company has an agreement. Product information displayed by Insurance Web Aggregators must be authentic and be based solely on information received from Insurers. Insurance Web Aggregators must not display ratings, rankings, endorsements or bestsellers of insurance products on their website. The content of the websites of the Insurance Web Aggregators must be unbiased and factual in nature; and Insurance Web Aggregators must not comment on Insurers or their products in their editorials or at any other location in their websites. Products listed on the Insurance Web Aggregator’s website for comparison must be categorized in the form and manner as prescribed under Form Q of Schedule IV under the Web Aggregator Regulations.

4.8 Remuneration and reward

Payment of remuneration and receipt of remuneration by an Insurance Web Aggregator shall be as per the limits specified in the IRDAI Commission Regulations, read with Regulation 30 of the Web Aggregator Regulations.

4.9 Code of conduct

While acting as a Seller App and providing its services, Insurance Web Aggregators shall be required to adhere to its code of conduct, as prescribed under Form W of Schedule VIII to the Web Aggregator Regulations.

E. Other general compliances applicable to Insurers and insurance intermediaries

5.1 Insurance advertisements and disclosures

Insurers and insurance intermediaries are required to adhere to various compliances in relation practices while issuing advertisements of insurance products, as prescribed under the IRDAI (Insurance Advertisements and Disclosure) Regulations 2021 (“Insurance Advertisements Regulations”). The requirements, inter alia, include the following:

• (a) Establish and maintain a system of control over the content, form, and method of dissemination of all advertisements concerning its policies or products;

• (b) Ensure that (i) the names of the product and benefits shall be as per the product filed with IRDAI; (ii) sales material and advertisements shall be comprehensible; (iii) it must prominently state the availability of underlying element of ‘insurance coverage’ to clearly identify the product as an insurance product;

• (c) Their website or portal must (i) contain disclosure statements which outline the website’s specific policies vis-á-vis the privacy of personal information for the protection of both their own businesses and the consumers they serve; and (ii) display their registration numbers on their websites.

• (d) Not allow a third party whether individual, association, entity or group, by whatever name called, to (i) distribute information about an insurance policy, Insurer or intermediary or insurance intermediary, on its letterhead or envelope or through any mode or medium including mail system or domain, unless the third party is providing only a distribution service for the advertisement and is not itself soliciting the insurance, and the insurance information or advertisement is a piece separate from any other information distributed by the third party and clearly indicates its origin; (ii) recommend that its members purchase specific insurance products; (iii) imply that a person must become a member of its organization in order to purchase the insurance policy; and (iv) imply that a purchaser of an insurance policy by becoming a member of a limited group of persons shall receive special advantages from the insurer not provided for in the insurance policy or product.

• (e) Follow recognised standards of professional conduct as prescribed by the Advertisement Standards Council of India and discharge its functions in the interest of the policyholders.

• (f) Every proposal form for an insurance product shall carry the following stipulation: “No person shall allow or offer to allow, either directly or indirectly, as an inducement to any person to take out or renew or continue an insurance in respect of any kind of risk relating to lives or property in India, any rebate of the whole or part of the commission payable or any rebate of the premium shown on the policy, nor shall any person taking out or renewing or continuing a policy accept any rebate, except such rebate as may be allowed in accordance with the published prospectuses or tables of the insurer."

5.2 Issuance of e-insurance policies

The IRDAI (Issuance of e-Insurance Policies) Regulations, 2016 (“e-Insurance Regulations”) prescribes compliances in relation to issuance of electronic policy and submission of electronic proposal form of insurance policies.

• (a) e-Proposal form: Every insurer soliciting insurance business through electronic mode is required to create an e-insurance proposal form similar to their physical form approved by IRDAI. Such form should enable capture of information in electronic form that would enable easy processing and servicing.

• (b) Electronic insurance policies: Every insurer must issue electronic insurance policies that fulfill the criteria given in Schedule I to the e-Insurance Regulations. Electronic Insurance Policies shall be deemed compliant only when issued with digital signature in accordance with applicable provisions prescribed by law.

• (c) Discount on electronic insurance policies: An insurer may offer discount in the premium rates to the policyholders for such electronic insurance policies exempt from issuance in physical form. Such discount must be in accordance with the discount rates filed under the Product Approval or the File & Use guidelines or as specified by IRDAI.

5.3 Customer information sheet

Insurers and intermediaries are required to forward the CIS to all policyholders and acknowledgement, physical or digital, must be duly obtained. The CIS must be made available in local language if the policyholder so desires. The CIS shall have minimum font size ‘12’ (Arial) or above. All details provided for in the CIS shall be duly filled in. The policy document forwarding letter shall contain a cross reference to the CIS. Annexure 1 to the IRDAI circular on ‘Revision of Customer Information Sheet’ dated 30 October 2023 provides for the template CIS, which includes the key information about the policy. Insurers must provide web-link where the product related documents including the CIS are available on the website of the insurer. In case of any conflict, the terms and conditions mentioned in the policy document shall prevail. Insurers are required take confirmation of the policyholder regarding receipt of CIS.

5.4 Insurance e-commerce

Any Insurer or insurance intermediary undertaking insurance e-commerce activities must comply with the ‘Guidelines on Insurance e-commerce’ issued by IRDAI, dated 9 March 2017 (“Insurance e-Commerce Guidelines”). Any insurance e-commerce activity must undertake such activities through an Insurance Self Network Platform (“ISNP”) set up with the permission of IRDAI. The Insurance e-Commerce Guidelines prescribes the code of conduct for Insurers and insurance intermediaries while undertaking insurance e-commerce activities through their ISNP and provides for other operational compliances.

5.5 KYC of customers

Insurers are required to ensure appropriate KYC fulfilment of their customers, in compliance with the guidelines prescribed under the consolidated ‘Master Guidelines on Anti-Money Laundering/ Counter Financing of Terrorism (AML/CFT), 2022’, issued by IRDAI dated 1 August 2022.