India's insurance regulator has fined private life insurer Birla Sun Life Insurance Company Ltd Rs.15 lakh for non-settlement of over four lakh claims totaling over Rs.4.13 crore for six years and violation of micro-insurance regulations.
In an order issued by Insurance Regulatory and Development Authority (IRDA) chairman T.S.Vijayan Monday, Birla Sun Life was ordered to remit a fine of Rs.15 lakh within 15 days.
According to the order, Birla Sun Life Insurance had sold 6,69,960 Bima Kavach Yojana policies between 2001-2011 and earned a premium of over Rs.6.14 crore.
The company has been sitting on claims amount totaling over Rs.4.13 crore on over four lakh claims.
Analysing the outstanding claims data, the IRDA said: "It is observed that the life insurer is not sensitive in paying adequate attention for settlement of maturity claims."
The insurance regulator did not buy Birla Sun Life Insurance's argument that the maturity amounts were small and the policyholders are not willing to accept cheques as they do not have bank accounts.
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Only after the show cause notice issued by IRDA, the insurer started paying out the claim amount through money orders.
"The life insurer shall also note that the company as part of its life insurance business is also in the business of claim settlement, which in fact, most important of all the services, to ensure that the targeted policyholder segment repose their faith in the business of life insurance," IRDA said in the order.
According to IRDA, Birla Sun Life Insurance grossly failed in complying with its protection of policyholders' interest regulations.
The company is a joint venture between the Aditya Birla group and Canada's Sun Life Financial Inc.