In an attempt to check false claims by insurance companies, Insurance Regulatory and Development Authority is finalising a code of conduct for life insurers which would prescribe the maximum and the minimum returns that can be offered each product segment.

In addition, policyholders would also get an annual statement on the status of their policy as part of the regulator's efforts to improve service quality in the industry.

"It would be in the nature of the annual loan statements sent by banks every year and would specify things like premium, the remaining premiums to be paid, the tenure and the maturity amount," said a senior executive with an insurance company.

Executives said once the code of conduct is put in place, actuaries from various companies would decide the maximum and the minimum rate of return that a policyholder would be entitled to on each product category.

These details would then have to be printed in each advertisement that a life insurer come out with. The decisions on returns would be taken by IRDA's Life Council on an annual basis, an executive added.

The returns offered on unit-linked policies that are at present in vogue would be, however, outside the ambit of the code of conduct since the IRDA does not regulate these polices.

"It is a gray area and needs to be discussed since some insurance companies are selling unit-linked plans in the garb of life insurance cover," head of a private sector insurance company said.

The Life Council has already deliberated on the matter and has submitted a draft code of conduct which would be issued by the insurance regulator.

IRDA chairman CS Rao has taken a stern view of the services that are being offered in the Indian market and has identified it as a priority item on his reforms agenda.

While IRDA has already issued policyholder protection norms for insurance companies, the regulator is not happy with the state of affairs in the wake of large number of complaints received from policyholders.

It also proposes to strengthen the legislative framework to ensure quality service to policyholders.