Insurance sector regulator Irdai has slapped a penalty of Rs 15 lakh on Reliance Nippon Life Insurance Company (RNLIC) for violation of outsourcing norms and other regulations.
Irdai said many Channel Development Associates (CDAs) were not imparting training and there were no adequate office space.
If RNLIC is involved in these activities the objective of appointing CDAs is questionable and making payments to CDAs will only increase the costs to RNLIC in violation of Corporate Governance Guidelines and asked the company to ensure strict compliance to the said norms, it added.
The Authority directed RNLIC to review all arrangements with CDAs and terminate all the CDA agreements which are not as per the provisions of Outsourcing Guideline.
"The penalty amount of Rs 15 lakh shall be remitted by RNLIC by debiting the shareholder's account within a period of 45 days from the date of receipt of this order," the Insurance Regulatory and Development Authority of India (Irdai) said in its order issued today.
Irdai said the company adopted poor management principles as CDAs were paid without any basis prior to December 2013.
"The payments to CDAs without invoices and without any basis prior to December 2013 clearly establishes the poor risk management principles adopted by RNLIC and proves the violations of set of provisions of Outsourcing Guidelines. The Authority imposes a penalty of Rs 10 lakh for violating the provisions of Outsourcing Guidelines during the years 2011-12, 2012-13," read the order.
Another fine of Rs 5 lakh was imposed as the company had failed to provide information to auditors about some CDAs.
Disclaimer: No Business Standard Journalist was involved in creation of this content
