Insurance Regulatory and Development Authority (Irda) has collected a whopping Rs 2.56 crore as penalty in the June to September period. The insurance regulator had imposed penalties ranging from Rs 5 lakh to Rs 1.47 crore on insurance companies. On one instance, a penalty of Rs 15 lakh was imposed on Indusind Bank, which is the corporate agent of Cholamandalam MS General Insurance.
In June, HDFC Standard Life Insurance had been asked to pay Rs 1.47 crore penalty for violation of certain provisions of the insurance act. Later in July, the regulator collected a total of Rs 50 lakh as penalty from insurers. This included companies like ING Vysya Life Insurance, Bajaj Allianz Life Insurance and Indusind Bank.
The bank was slapped a penalty for receiving payment from the insurer that were over and above the permissible commission rates, which was a violation of the Insurance Act.
August also saw large penalties being imposed on insurers, including the Rs 49 lakh penalty on Tata AIG Life Insurance for violating regulations on multiple counts, including excess payment of commission to insurance agents. Further, Rs 5 lakh penalty each was imposed on New India Assurance and National Insurance.
Industry players are of the view that though the penalty amounts were a little stringent, they said that regular fines were necessary to maintain the sanctity of the insurance sector. “We have also been fined in the past. However, we believe that it is a good policy on the part of the regulator to fine violators of the insurance act. This is good, both for the sector and for the end-consumers, as they can no longer be deceived,” said a senior executive of a leading private life insurance company.
In September too, the regulator has maintained the momentum in its policy. Last week, Kotak Old Mutual Life Insurance was fined Rs 22 lakh for violating rules pertaining to the file and use procedure and violation of group guidelines.
