Guidelines on Distance Marketing of Insurance Products
These Guidelines are issued in exercise of the powers conferred upon the Authority
under Section 14(1) of the IRDA Act, 1999 to protect the interests of the
policyholders and to regulate, promote and to ensure the orderly growth of the
1. Scope and applicability of these Guidelines
a) Distance marketing includes every activity of solicitation (including lead
generation) and sale of insurance products through the following modes:
Voice mode, which includes telephone-calling;
Short Messaging service (SMS);
Electronic mode which includes e-mail, internet and interactive
Physical mode which includes direct postal mail and newspaper &
magazine inserts; and,
Solicitation through any means of communication other than in person.
These Guidelines cover distance marketing activities of insurers/brokers and
corporate agents (with specific approval of insurers) at the stages including
offer, negotiation as well as conclusion of sale.
b) These Guidelines are specifically applicable in case of the following activities
in addition to other similar activities:
Use of distance mode for ascertaining the client’s intent to purchase
Solicitation as well as sale over the distance mode.
(iii) Lead Generation; and,
(iv) Requests by clients seeking information or sale of insurance products.
“Authority” means the Insurance Regulatory and Development
Authority established under the provisions of Section 3 of the Insurance
Regulatory and Development Authority Act, 1999 (41 of 1999)
“Corporate Agent” – as defined in Regulation 2(f) of IRDA (Licensing of
Corporate Agents) Regulations, 2002
“Insurance Broker” – as defined in Regulation 2 (i) of IRDA (Insurance
Brokers) Regulations, 2002
“Insurer” – as defined in Section 2 (9) of Insurance Act, 1938.
“Telemarketer” means an entity registered with Telecom Regulatory
Authority of India under Chapter III of The Telecom Commercial
Communications Customer Preference Regulations, 2010 (as
amended from time to time) to conduct the business of sending
commercial communications on behalf of Insurers, Corporate Agents or
“Specified Person” – As defined in Regulation 2 (n) of IRDA (Licensing
of Corporate Agents) Regulations, 2002.
(vii) “Tele caller” – For the purpose of these Guidelines, a Tele caller is a
person engaged by a Telemarketer for the purpose of interacting with
clients over distance mode.
(viii) “Authorized Verifier” – For the purpose of these Guidelines, an
Authorized Verifier is a person employed by a Telemarketer for the
purpose of solicitation or sale over telephonic mode.
“Designated Person” – As defined in regulation 2 (f) of IRDA (Licensing
of Insurance Agents) Regulations, 2000.
“Principal Officer” – As defined in regulation 2 (k) of IRDA (Insurance
Brokers) Regulations, 2002.
“Lead Generation” – For the purpose of these guidelines, lead
generation is the process of collecting the details of the clients or
prospects in any fashion or approaching the clients directly or in
distant mode to ascertain their intent to purchase insurance before
proceeding with solicitation of insurance products and includes all the
activities leading to the solicitation.
defined as the approach of a client by an insurer or an intermediary
with a view to induce the client to purchase an insurance policy.
(xii) “Solicitation” – For the purpose of these guidelines, solicitation is
Insurers/brokers/telemarketers shall, in addition to these Guidelines, comply
with all the applicable provisions of the Insurance Act, 1938, the IRDA Act,
1999, IT Act, 2000, TRAI Act, 1997, The Telecom Unsolicited Commercial
Communications (Amendment) Regulations, 2008 and the rules, regulations,
circulars or guidelines, as applicable, to be issued from time to time.
Persons engaged for solicitation
For the purpose of solicitation of insurance business through distance
marketing, insurers/brokers may engage:
Employees on their rolls (brokers shall engage only those
employees who have undergone statutory training);
Specified persons of corporate agents, or
(b) Insurers or brokers as the case may be shall be responsible for all acts of
commission and omission of the persons deployed on their behalf.
Agreements between Insurers/Brokers and Telemarketers
The agreement between the insurer/broker and Telemarketer, by whatever
name called, shall interalia include the following clauses:
The Telemarketer shall maintain/preserve recordings of all the calls in
a manner that is compliant with the provisions of these Guidelines, till
such records are transferred in satisfactory condition to the insurer.
The Telemarketer shall maintain records of all the tele callers and
authorized verifiers employed by them along with their training and
The records under (i) & (ii) above shall be open to inspection by the
Role of Authorized verifier:
Telemarketers shall employ either specified persons (in case the
telemarketer happens to be a corporate agency), the employees of the
insurer or authorized verifiers, who alone are permitted for soliciting and
concluding the sale of insurance products in distant mode.
The authorized verifiers shall be tied to the Telemarketer in which they are
Authorized verifiers are barred from soliciting insurance in their individual
capacity in any mode, or on behalf of any organization other than the
Telemarketer employing him.
Distance Marketing by Brokers
Insurance brokers shall not exclusively promote the products of any
particular insurer, and shall suggest the best available product in the
market that fits the needs of the client.
The price comparison charts that are displayed shall be up to date and
reflect a true picture of all the available and suitable products under
Insurers shall not pay the brokers any remuneration other than
brokerage. No payments by any name shall be made by insurers to
brokers or their related parties towards infrastructure or any account
other than brokerage on the policies solicited or procured over distance
(iv) Insurers shall specifically identify the proposals procured by brokers over
distance mode and obtain all relevant records pertaining to such
policies. Insurers shall produce such records before the Authority in
case of dispute involving alleged violation of breach of conduct by the
Brokers may outsource tele-calling activities to Telemarketers.
Training of tele callers and Authorized Verifiers
Every tele-caller shall be trained at an institute accredited for pre-
license training of agents by the Authority in the matters specified in
The training shall be for duration of not less than 25 hours as per
syllabus to be prescribed by the IRDA in matters related to regulations,
disclosures, ethical conduct of business and specific instructions to be
complied with while making the calls.
The tele-callers shall clear the post-training assessment/test to be
conducted by the respective insurers/brokers in matters mentioned in 4
Authorized Verifiers shall fulfill the requirements as for specified
persons of corporate agents such as qualification, 50-hour pre-license
training at an accredited agents training institute and passing the
examination. They would be certified as authorized verifiers by the
designated person or the principal officer concerned subject to
fulfillment of the specified qualifications/norms.
Insurers/Brokers, and corporate agents wherever applicable, shall
maintain a register of all persons engaged by them or by the
telemarketers hired by them for the purpose of lead
generation/solicitation of insurance business. The register shall, apart
from the name and address of the Telecaller/Authorised Verifier, also
contain valid copies of his proof of identification and other relevant
credentials. Insurers shall allot a distinctive code number to every
telecaller/authorised verifier and record the same in a register
maintained for the purpose.
Process of lead generation/Solicitation
Solicitation of insurance as well as lead generation shall be in
compliance with the following norms:
Insurers/Brokers shall prepare standardized scripts for presentation of
benefits, features and disclosures under each of the products proposed
to be sold over the distance modes. Solicitation and lead generation
under distant mode shall be in line with the standardized script.
The scripts shall be incorporating all the Key Features of the product
and shall be approved by the compliance officers of the respective
insurers. The scripts shall be filed with the Authority under “Use & File”
procedure within 15 days of their approval by the compliance officer.
The communication shall clearly highlight the name of the insurer.
The fact that the purpose of approach is lead generation/solicitation of
insurance shall be clearly highlighted.
Consent of the client
The tele caller and the authorized verifier shall ascertain if the client is
interested in continuing with the subject, and the process of solicitation
shall proceed further only on receiving the consent in explicit terms.
The client shall be given an option to continue with the subject or exit
the page at every stage in case of electronic modes. The hours during
which calls are made shall be in accordance with orders issued by
TRAI/DoT from time to time.
In case of telephonic solicitation the name of the caller shall be
disclosed and the language options available must be indicated. The
subsequent communication shall continue only in the language chosen
by the client.
Tele callers shall inform clients that the call is being recorded and that
the client is entitled to a voice copy, if he so desires, at any time during
the term of the policy or until a satisfactory settlement of claim,
whichever is later.
No inconvenience, nuisance or harm shall be caused to the clients in
the course of solicitation or thereafter. Full disclosures shall be made to
the clients under all modes of distance marketing and the requirements
of confidentiality, privacy and non-disclosure shall be complied with.
All relevant information pertaining to the client as well as the person/asset to
be insured shall be obtained, and solicitation shall be strictly on the basis of
analysis of the client’s needs as specified by the Authority from time to time.
Product benefits & Features
The standardized script shall cover the following items in the course of product
The specific responses of the client in the form of agree/disagree,
yes/no, accept/reject, understand/don’t understand, as applicable,
against each of the items below, under all modes of distance
Name of the product suggested and its nature and parameters.
Insurance cover available under the product for a specified amount of
annual premium, or, conversely, premium chargeable towards a
specified amount of insurance cover.
The scope of cover, perils covered and not covered, exclusions,
deductibles or franchise, co-payments, loading/discounts on premiums,
add-on covers, conditions, other terms and benefits, mid-term
inclusions, short period scales, basis of sum insured, warranties,
clauses and endorsements, compliance with Section 64VB of the
Insurance Act, 1938 – payment of premium before commencement of
risk, etc, as applicable.
The contents of the “key features document” as and when specified by
The right to cancel the policy within 30 days of receipt of the policy in
case of disagreement with the terms of the policy under all life contracts
and covers tied to credit/debit/other cards, and for all personal accident
and health insurance policy contracts with a term of 3 years or more
offered by insurers over distance mode, provided no claim has already
been made on the policy.
(vii) Disclosure of rates of commission available on the product solicited
upon the request of the client.
Premium Ceilings in case of sale of ULIPs and prohibition of sale of
Universal Life Products over telephonic mode
Insurers shall not solicit ULIPs of non-single premium type for
annualized 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 1,00,000/- over telephonic mode.
No variable insurance product shall be solicited or sold over distance
Once the client agrees to purchase a policy, the proposal form and premium
acceptance shall comply with the following requirements:
The premium towards the policy may be debited online or interactive
voice response medium or through a manual collection subject to
compliance with the procedures and controls prescribed by the RBI.
The norms applicable to insurers as regards AML and PAN need to be
complied with in the process of selling a policy over distance marketing
In all instances where a policy is issued without obtaining a proposal in
physical form, insurers shall forward a verbal transcript of the
voice/electronic record of the queries raised and answers thereto on
the basis of which the policy has been underwritten, along with the
For policies solicited/sold over distance mode, insurers shall issue
policies in exactly the same format and medium as in case of sale
through physical interface, duly enclosed by the requisite annexures.
The address and toll-free number of the office to be contacted by the
policyholder in case of a servicing need or grievance shall be informed
to the client.
Before conclusion of sale the authorized verifier / specified person /
employee (as the case may be) shall divulge his name and distinctive
code number / license / employee number to the prospect and this
shall form part of the recorded conversation for the sake of future
(vii) The records pertaining to every call made and SMS sent by a
Telemarketer/Corporate Agent/Broker that materializes into a policy
shall be transferred to the insurer’s location within 30 days of
conclusion of sale. In case of telephone calls the records transferred
shall be the recordings of the entire conversation.
No Unfair Denial of Insurance Cover
When a client approaches an insurer or broker over distance mode proposing
for insurance cover, the latter are duty-bound to consider the case on merits
and in accordance with regulatory directions and their own norms. In no case
shall they resort to an unfair denial of cover to a client who seeks insurance.
Preservation of Records
The insurer shall preserve, in an inalterable and easily retrievable form, a
voice/electronic/physical record, as applicable, of the entire process
beginning with lead generation/solicitation and concluding in sale of
insurance, for a period of six months beyond the term of the policy or until
satisfactory settlement of claim, whichever is later. Voice and electronic
records shall be digitized and encrypted for storage to ensure reliability and
security of the data.
Insurers/Brokers shall monitor the calls live by arranging for listening to at
least 1% of the calls as they happen.
Insurers shall verify at least 3% of calls leading to sales for compliance
with the guidelines, by engaging a team of dedicated employees to listen
to the call recordings. The observations made in the course of verification
shall be preserved in a retrievable form for a period of not less than three
Insurers shall make verification calls, to monitor the quality of sales, to a
minimum of 3% of the policyholders who purchase insurance over
distance marketing mode, every month. The purpose of verification calls is
to ascertain whether the client has understood the benefits, features and
disclosures of the product purchased correctly. Verification calls shall also
bear a standardized script and the records of calls shall be preserved for a
period (a) not less than 15 months from the date of policy or until
satisfactory claim settlement, whichever is later, in case of non-life
contracts (b) not less than 3 years in case of life insurance policies.
The policies under (ii) and (iii) above shall be selected according to a
random pattern, making sure to cover each product category and mode of
Certification of Compliance
The compliance officer of each insurer shall submit to the Authority, at the end
of each financial year, a certificate confirming that the insurer has complied
with all the provisions of these Guidelines during the financial year.
For the purpose of these guidelines the contract of insurance shall be deemed
to include the contents of KFD and the records of calls to the client pertaining
to the product. In case of disputes involving specific wordings of the policy,
the client shall have the right to give primacy to the wordings of the KFD and
the calls over the specific wordings of the policy.
The above guidelines shall be applicable from 1st October, 2011.
(J. Hari Narayan)