 "Irda imposes Rs 1.77 cr penalty on Reliance Life Insurance")
The Insurance Regulatory and Development Authority (Irda) has imposed a series of penalties, totalling Rs 1.77 crore, on Reliance Life Insurance for breach of sectoral rules.
One penalty of Rs 25 lakh was imposed due to service agreements with various entities, which Irda says were also engaged for providing services of lead generation and dissemination of information. Entering into service agreements and making payments for lead generation and dissemination of information was not permitted even before the Irda (Sharing of Database) Regulations, 2010. Irda says entering into such agreements with various third parties is a breach of the Insurance Advertisement Regulations, 2000, too.
“Further, payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable,” said Irda in the order. Reliance Life has been directed to immediately discontinue the payments.
Apart from these, penalties were imposed for procuring business from unlicensed individuals or entities in violation of Irda norms. The company has been told to confirm the compliance in respect of all other directions in the order within 15 days.
Recently, SBI Life Insurance had planned to appeal to Irda against the latter’s directive to refund Rs 275.29 crore to beneficiaries of group insurance schemes.
Also, Irda had asked private life insurer HDFC Life to comply with earlier directions with respect to file-and-use norms. In September 2013, it had warned HDFC Life against violation of the guidelines in this regard, of changing the terms and conditions of approved versions of the products without prior approval from Irda.
One penalty of Rs 25 lakh was imposed due to service agreements with various entities, which Irda says were also engaged for providing services of lead generation and dissemination of information. Entering into service agreements and making payments for lead generation and dissemination of information was not permitted even before the Irda (Sharing of Database) Regulations, 2010. Irda says entering into such agreements with various third parties is a breach of the Insurance Advertisement Regulations, 2000, too.
“Further, payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable,” said Irda in the order. Reliance Life has been directed to immediately discontinue the payments.
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Another Rs 25 lakh penalty was imposed since Irda said the procedure adopted in issuing cheques favouring the Master Policy Holder was in violation of its group insurance guidelines. It says Reliance committed this violation every year from 2009-10 on. The company has been told to issue death claim cheques directly in favour of the nominee or beneficiary of the deceased member of a group insurance scheme. “...(And) in respect of any group insurance, the death claim proceeds shall be only settled in monetary value and claim settlements shall be in accordance with the applicable regulations notified by Irda.”
Apart from these, penalties were imposed for procuring business from unlicensed individuals or entities in violation of Irda norms. The company has been told to confirm the compliance in respect of all other directions in the order within 15 days.
Recently, SBI Life Insurance had planned to appeal to Irda against the latter’s directive to refund Rs 275.29 crore to beneficiaries of group insurance schemes.
Also, Irda had asked private life insurer HDFC Life to comply with earlier directions with respect to file-and-use norms. In September 2013, it had warned HDFC Life against violation of the guidelines in this regard, of changing the terms and conditions of approved versions of the products without prior approval from Irda.