Based on the

(i)           ShowCause Notice (“SCN”) reference No.IRDAI/NL/AGIL/ADVT/SCN/88/2019-20 dated 25th July, 2019 issuedby the Insurance Regulatory and Development Authority of India (~the Authority~or ~lRDAl~) in respect of advertisements released by M/sAcko General Insurance Ltd.

(ii)         M/s. Acko General Insurance Ltd.’s (“AGIL” or“Insurer” or “the Company”) response dated 16th August, 2019 to theaforesaid SCN.

(iii)        The submissions made by AGILduring thePersonal Hearing held on 7thOctober, 2019 granted by the Chairman ofthe Authority at its office at Hyderabad.

(iv)        Further submissions/data submitted by AGIL post personal hearing vide email dated 30thOctober, 2019 and email dated 4th December, 2019.

1.           Background:

1.1        The Authority, while examining the advertisements filed by AGIL in advertisement module of Business Analytics Project (BAP) as well as the advertisements that appeared in various media, observed that the Insurer has violated the provisions in respect of IRDA (lnsurance Advertisements and Disclosure) Regulations,2000(hereinafter referred as said Regulations) and Master Circular issued there under. Hence, SCN was issued on 25th July, 2019, which was responded to by AGIL vide letter dated 16th August, 2019. As requested for by AGIL therein, personal hearing was granted to AGIL on 7th October,2019. 

1.2        Mr. Varun Dua, Managing Director & Chief Executive Officer, Ms. Karishma Desai,Chief Compliance Officer, Mr. Biresh Giri,Appointed Actuary were present in the personal hearing on behalf of AGIL. On behalf of the Authority,Ms. Yegnapriya Bharath, CGM(NL), Mr. K. Mahipal Reddy, DGM (NL), Mr. Pradeep Kumar Singh, Manager (NL) were also present.

1.3        The submissions made by AGIL in its letterdated 16th August, 2019, during the personal hearing on 7th October,2019 and post personal hearing vide email dated 30thOctober,2019 and email dated 4th December, 2019 have been considered by the Authority.

The charges in the SCN, submissions of the Insurer and decisions of the Authority are given hereunder.

2.           Charge1:

 2.1        The Insurer has violated Regulation 3 (1) (v)of IRDA (Insurance Advertisements and Disclosure) Regulations,2000 and clause 10 of the Master Circular no. IRDAI/LIFE/ClR/MISC/147/08/2015 dated 13th August,2015 that all advertisements should be filed within 7 days of their release.

(i)   Advertisement on Motor lnsurance-Quick Ride

(ii) Advertisement showing ~Acko General lnsurance(now officially 2nd best in the world)~

 2.2        Summary of Insurer's submissions

     2.2.1     AGILhas submitted that the advertisement pertaining to Quick Ride was filed in BAPwith URN No. 250201819500157025 on 12th June, 2018.Further,during personal hearing AGIL has confirmed that only thepicture part of theadvertisement was filed by the companyin BAP system. At the same time, the insurer accepted that the third party i.e.Quickride has added additional conditions and issued some part of the advertisementwithout the knowledge of AGIL, which should not have been done. The insurer hastaken corrective action for the lapse and vendor ‘Quickride’ is no moreassociated with AGIL.

    2.2.2     AGILhasacknowledged the fact that there were inadvertent lapses on their part for notfiling the advertisements. The Insurer believed that there is no need to filethe news content as advertisement hence not filed in BAP. Otherwise, the insurerhas assured the Authority that there was no intent of AGIL to mislead theprospective customers with the content, which was posted by an independentagency called Insurance Post, UK.

 2.3        Decision on Charge 1:

   2.3.1     Thecharge on incomplete and non-filing of the said advertisements is admitted by the Insurer. However, based on the submissions made by theinsurer and on theirassurance that the advertisement process has been redefined to ensure compliance,theinsurer is hereby cautioned and directedto scrupulously adhere to theIRDA (InsuranceAdvertisements and Disclosure) Regulations, 2000 and the Master Circular issuedthereunder so as to prevent recurrence of such lapses.

3.           Charge 2:

 3.1        Violation of Regulation 12 readwith 2(d) (iii) of IRDA (Insurance Advertisements and Disclosure) Regulations,2000 and Clause No.3.4.2.4 and 3.4.1.2 of Master Circular Ref: IRDAI/LIFE/ClR/MlSC/147/08/2015dated 13th August, 2015 that the advertisements should not bemisleading.

                           i.       Advertisement on Motor lnsurance Quick Ride

                           ii.       Advertisement of Premium of Rs. 2299/-

 3.2        Summary ofInsurer`s submissions

   3.2.1     Theinsurer submitted that the advertisement on Motor Insurance Quickride only seeksto inquire further about the product and does not mention any product specificinformation, terms and conditions of the policy. The company has not omittedany limitations/conditions of policy contract since information has nothighlighted any product specific information on the advertisement. When acustomer chooses to know more by clicking on the advertisement, customer isredirected to the Company`s website where all necessary disclaimers along withspecimen wordings detailing features, benefits, exclusions etc. are availablefor any further reference.

   3.2.2     Allinsurance policiesare being sold subject to standard terms and conditions offiled product. Various advertisements issued for Rs2299/- as shown in photos with big sedan car pictures (engine more than 1000CC) were just for illustration to customers to generate the desire to enquireabout the offerings of the insurance company. There was no specific intent tomislead the customers and generate leads because the final offer will always beas per the standard underwriting parameters and on the assumption that customerswho have online skills will definitely understand the basics and the requirementsfor motor insurance cover.

   3.2.3     TheInsurerexplained that they ran an advertisementcampaign pilot for multiple make-model samples to check the consumers’ responseon the advertisement. For a similar creative, multiple top selling vehicleswere selected. The starting premium was calculated considering theEngine CC and applicable Third party premium slab, though the same was correctfor all models, it came out to be incorrect for Hyundai i10 as Hyundaihas not launched i10 less than 1000CC. This was a mistake and the companyhad no intention to misguide the customers. All the other advertisementssubmitted along with this had the correct premium and considering the right TPslabs and Engine CC for available variants. Also the insurer started theprocess to roll back the i10 creative and their Underwriting team is revisitingthe starting price for all such models.

 3.3        DecisiononCharge 2:

   3.3.1     Theadvertisement on Motor lnsurance-Quick Ride is found to be unfair or misleadingfor it disclosesinsufficiently the limitations/conditions of policy contract. As per ClauseNo.3.4.2.4 of Master Circular no. IRDAI/LIFE/ClR/MlSC/l47/08/2015 dated 13thAugust, 2015, the advertisement should not disclose benefits partially withoutdisclosing the corresponding limitations/conditions/implications. Itis noted that the Insurer subsequently had taken corrective action for thelapse.

   3.3.2     AGILhas issued various advertisements showing car insurance starting @ Rs 2,299/-and filed in BAP under private car package insurance product. The insurersubmitted the premium detailswith assumption of IDV at Rs 100,000, NCB 50% and Third Party premium ofprivate Car not exceeding 1000 cc but the advertisement depicts Sedan type andother type Cars which have cubic capacity of engine exceeding 1000 cc. For thecars with engine above 1000 cc, the correct minimum Third Party Premium shouldbe Rs 2,863/- and not as illustrated by the insurer.

   3.3.3     AGIL`sexplanation that the starting premium was calculated consideringthe Engine CC and applicable third party premium slab, though the same wascorrect for all model is not acceptable. It is found that the correct make andmodel of vehicle was not given in the advertisements. The appeal to theprospects in the advertisements is through portraying picture of cars withoutdisclosing the make and model of cars and this tantamountsto misleadinginformation.

   3.3.4     TheInsurer in their reply admitted the mistake that for Hyundai i10, it came outto be incorrect as Hyundai has not launched i10 less than 1000CC. Hence,the advertisement is unfair or misleading as defined under Regulation 2(d)(iii) of said Regulations andit gives information in a misleading way and the assumptions are not as per thetype of private car depicted.

   3.3.5     Uponexamination of responses of Insurer to show cause notice and submission duringpersonal hearing, it is established that the said advertisements are inviolation of Regulation 12 of IRDA (lnsurance Advertisements and Disclosure)Regulations, 2000 i.e the recognized standard of professional conduct asprescribed by the Advertising Standards Council of lndia (ASCI) that theadvertisements should not be misleading. The advertisement is in violation ofClause No. 3.4.1.2 of Master Circular which requires that the Advertisementshould ensure that it discloses all relevant assumptions.

   3.3.6     Asper the data submitted by AGIL,the advertisement on Hyundai i10wasin display in digital medium for more than hundred days from the date ofrelease of advertisement. Considering the release of misleading nature ofadvertisement, in exercise of powers vested in theAuthority under section 102 of InsuranceAct, 1938 and amendments made thereto, a penalty of Rs. 1,00,00,000 (RupeesOne Crore Only) is levied on the Insurer for the violation period.

   3.3.7     Further,the insurer is directed to issue advertisements with complete and correctinformation on the insurance cover offered duly considering all the applicableRegulatory provisions and guidelines issued thereunder from time to time.

4.           Charge 3:

 4.1        Violation of Clause No.4.1 of Master CircularRef IRDAI/LIFE/ClR/MlSC/147 /08/2015 dated 13thAugust, 2015.AdvertisementUIN 157NAD201819047- Filed under Amazon exclusive campaign.

 4.2        Summary of Insurer`s submissions

   4.2.1     TheInsurer has submitted that the Amazon customers’advertisement for exclusiveoffers were based on social group/login basis discounts duly approved by the actuarialpricing for differentiation i.e. based on social network profile of individualsand being sourced as direct e-based sales for the company.

   4.2.2     Thecompany had inadvertently missed to enter details of Amazon in theadvertisement application. Henceforth, the Company is taking utmost care whilefiling the details and formswith the Authority.

 4.3        Decision on Charge 3:

   4.3.1     AGILhas filed advertisement with UIN 157NAD201819047 under Amazon exclusivecampaign as ~Featured lnsurance Partner~. AGIL in reply letter dated 16thOctober, 2018 confirmed that this is an exclusive co-branded product that hasbeen noted by the Authority and also no cash back credit has been offered oncompletion of the purchase.

Nevertheless,it was observed that in the given advertisement application, the insurer hasnot furnished the name of Amazon while filing this advertisement. Hence, fullinformation was not given in the filing.

   4.3.2     Theinsurer,during personal hearing, also requested to confirm the source for Amazon advertisementphoto quoted by the Authority, as they believe it may not be filed by them.However, later it was confirmed to the Insurer vide email dated 29thOct, 2019 that the source of the photo is indeed from the BAP filing of theAGIL.

   4.3.3     Further,as per Master Circular clause no 4.1, branding with third parties shall meanthat any individual/association/entity other than insurance intermediary can beused on any advertisement of insurer/intermediary only when it does not urgethe prospect or a policyholder to purchase, renew, increase, retain or modify apolicy of insurance. But the advertisement shows the feature of how it workswhich includes completing the purchase and crediting of cash back by Amazon.Given that the contents of advertisements do urgethe prospect or a policyholder to purchase, the said advertisement is in Violationof Clause No.4.1 of master Circular Ref IRDAI/LIFE/ClR/MlSC/147 /08/2015 dated13th August, 2015.

   4.3.4     Takinginto consideration the response of the Insurer that the advertisement process hasbeen redefined to ensure compliance with said regulations,the insurer is directed to exercise care and diligence in complying with IRDA(Insurance Advertisements and Disclosure) Regulations, 2000 and MasterCircular.

   4.3.5     Asregardsthe advertisement showing Cashbackup to 5% of car insurance purchase amount and theadvertisement with the feature of crediting cash back by Amazon, these are inviolation of section 41(1) of the Insurance Act, 1938. Thematter is being inquired into by the Adjudicating Officer underSection 105C of the Insurance Act, 1938.

5.           Charge 4:

 5.1        Violation of Clause No.5.3 of master CircularRef IRDAI/LIFE/ClR/MlSC/147/08/2015 dated 13th August,2015.Advertisement showing Acko GICL (now officially 2nd best in the world).“Noclaim of ranking by an insurance company, as regards its position in theinsurance market, based on any criteria is permissible in any of theadvertisement”.

 5.2        Summary of Insurer`s submissions

TheInsurer,in its written response,has submitted that it was the Company`sunderstanding and belief that as per clauses 5.1 & 5.2 of Master Circularon Insurance Advertisements,any claim of rating/award may be published if it isbased only on those declared by entities which are independent of the insurersand its affiliates. Insurers and its affiliates should not however, procureservices from such independent entities so as to get a rating/award. The postwas published by an independent agency called Insurance Post, UKand AGIL has noaffiliation with the entity, it has promoted the content. The Insurer assuredthe Authority that there was no intent of AGIL to mislead the prospectivecustomers with the content and only the web link of the postalong with source wassimply shared as published by the agency.

 5.3        Decisionon Charge 4:

   5.3.1     TheAdvertisement that shows Acko General lnsurance (now officially 2nd best in theworld) is in violation of Clause No.5.3 of the Master Circular.The Insurer’ssubmission that post was published by an independent agency and only the weblink of the postwas provided by AGIL is not acceptable. It is my consideredview that the Insurer should indeed object to any entity carrying out suchposts which are not in compliance with extant Regulations/ Circulars applicableto Insurers instead of facilitating web link to the post.

   5.3.2     Takeninto consideration the submission that the Company has removed the saidadvertisement and based on the assurance given by AGIL in the personal hearing thatthe process has been redefined to ensure compliance with AdvertisementRegulations and circulars, theInsurer is hereby cautioned to exercise care and diligence in complying withthe IRDA (Insurance Advertisements andDisclosure) Regulations, 2000 and Master Circularissuedthereunder.

6.           Summary of Decisions:

In conclusion, as directed under the respectivecharges, the penalty of Rs. 1,00,00,000/- (Rupees One Crore only) shall beremitted by the Insurer within a period of 15 days from receipt of this Orderthrough NEFT/RTGS (details of which will be communicated separately). Anintimation of remittance may be sent to Ms. Yegnapriya Bharath, Chief GeneralManager (Non-Life) at Insurance Regulatory and Development Authority of India,Sy. No. 115/1, Financial District; Nanakramguda, Gachibowli, Hyderabad-500032.

Further,

(i)           The Order shall be placed before the Board ofthe insurer in the upcoming Board Meeting and the insurer shall provide a copyof the minutes of the discussion.

(ii)         The general insurer shall submit an ActionTaken Report to the Authority on directions given within 90 days from the dateof this Order.

7.           If AGILfeels aggrieved by this Order, anappeal may be preferred to the Securities Appellate Tribunal as per theprovisions of Section 110 of the Insurance Act, 1938.

(Dr. Subhash C. Khuntia)

Chairman

Place:  Hyderabad                                                             

Date:24thJanuary, 2020