IRDA advices insurance cos to use distinct trade logos

The Insurance Regulatory and Development Authority (IRDA) has issued an exposure draft on the usage of trade logos by insurers, in which it has advised all insurance companies to use distinct trade logos of their own in order to reduce cost and minimize the confusion in the minds of distributors and investors as well. The regulator has highlighted the reputational risks associated with the insurance companies using the trade logos of their business partners or promoters.

The regulator, in its exposure draft, clearly said that if an insurance company uses the trade logo of any of its partners, there should be a prominent declaration that the insurance company is a separate entity, giving the names of all the partners. The insurance company should mention clearly that mere adoption of a promoter’s logo does not convey any inheritance of financial strength and the quality of promoter in products and services of the insurance company. Further, the draft also said that if an insurance company uses the trade logo of any of its partners, there must be a written agreement between the insurance company and the promoter with underlying terms and conditions. Also, the parties to the agreement shall specify the consideration amount, if any, leaving no scope for any arbitrary payments.
When the consideration is premium, it should mention the percentage of premium with reasonable capping.

If there is no consideration, specific mention of this should be made in unambiguous terms.Should have specific caveats on settlement of compensation.Agreement must be signed for specific period.Any payout towards compensation should be remitted from the shareholder’s account.IRDA also said that some companies have agreements for using promoters’ logos, but there is specific timelines to use trade logo.IRDA has asked all insurers to send their recommendations before September 30, 2013.

Source: http://www.insuringindia.com