Insurance sector regulator IRDAI today imposed a fine of Rs 50 lakh on Future Generali India Life Insurance Company for violating various norms, including financing a related entity in a "camouflaged way".
"... As directed under the respective charges, the penalty of Rs 50 lakh shall be remitted by the Life Insurer by debiting shareholders' account within a period of 15 days from the date of receipt of this order," the Insurance Regulatory and Development Authority of India (IRDAI) said in an order.
Pressing a charge of benefiting a related entity under the guise of brand building, IRDAI slapped a fine of Rs 5 lakh on the company.
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During 2010-11, the company purchased Big Bazaar Gift Vouchers worth Rs 23.5 crore under sales and marketing promotions head from Future E-Commerce Infrastructure Ltd and distributed the same to unidentified beneficiaries in the name of 'Brand Building Activity and Recruitment Drive of Potential Advisors', the IRDAI order said.
"The gift vouchers once used would benefit the group companies only. Further, the expenditure on such activities seems to be unreasonable, despite the fact that the company exceeded the prescribed Management Expense...Considering the same as a gross violation, a penalty of Rs 5 lakh is levied on the Life Insurer," the order said.
For sourcing policies through unlicensed entities, non-receipt of approval of renewal of corporate agency within 7 days, making payments to unlicensed entities under the guise of marketing, continue soliciting through un-licensed entities despite circulars and wrong submissions, penalties of Rs 5 lakh each have been levied on Future Generali.
Similar amount of penalty was imposed for failing to provide evidence about manner of nomination of a person for procuring business.
"It is not clear as to why a service provider to the life insurer who has no linkages with the corporate agent was nominated for the conclave. Thus, it may be safely concluded that the person who had no role in procuring business for the corporate agent was remunerated in kind by way of a ticket to a foreign trip. This tantamount to violation of the provisions ... A penalty of Rs 5 lakh is levied on the Life Insurer".
Also, IRDAI said the Insurer has a causal approach toward settlement of claims, no proper mechanism to administer group insurance schemes and makes payout in the name of marketing support arrangement and slapped a penalty of Rs 5 lakh each.
IRDAI has also warned the company, to confirm compliance in all directions issued to it, within a period of 21 days.
The regulator levied a total of 34 charges on the company. Several of the charges were not pressed, while warnings were issued in some other cases.
