IRDA to regulate distance sales channel of insurance

In order to streamline the promotion of insurance products through "distance sales channels", such as telephone and internet, the Insurance Regulatory and Development Authority (IRDA) has proposed certain guidelines.
The regulator intends to issue guidelines for selling under ‘voice mode’ (includes telephone calls), ‘electronic mode’ (includes e-mails, internet and interactive television) and ‘physical mode’ (includes postal mails and newspapers)
It is noteworthy that although web-based selling of insurance products is in its nascent stage in India (low volumes), the IRDA has said that the guidelines would cover distance marketing activities of insurers, brokers at the stages of offer, negotiations and conclusion of sale.
Hence, insurers or brokers will be required to prepare standardised scripts for presentation of benefits, features and disclosures for each of the products which are proposed to be sold. Moreover, IRDA also wants name of the insurer, name of the caller, the language options available, and the purpose of approach to be clearly highlighted. Therefore, the telecaller will have to ask the client if he is interested in continuing with the subject, and thereafter the process of solicitation would follow, subject to the client’s consent in explicit terms. In order to make this whole process more vigilant and professional, IRDA has also asked insurers to ensure every telecaller is trained either in-house or at an institute accredited for pre-license training of agents.
In order to monitor the complete sales channel post-sales, insurers will be required to monitor the quality of sales through telephonic confirmation for all modes of marketing - including in-person and distance modes, by calling up not less than 20% of all the policyholders every month.
We believe that, the move taken by IRDA is in the long-term interest of the policy holders, as it has built-in a reasonable mechanism to infuse transparency in the sale process and curb mis-selling. Insurance companies will see this as an extra cost and may find ways to work around the directive - IRDA must ensure its intent in issuing these guidelines is well executed.