Insurance sector regulator Irdai has imposed a penalty of Rs 10 lakh on Max Life Insurance Company Ltd for violating norms related to outsourcing and file & use clause.
In conclusion, as directed under the respective charges, the penalty of Rs 10 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, Insurance Regulatory and Development Authority of India said in an order today.
The case is pertaining to an onsite inspection of Max Life Insurance during February 25 to March 7, 2013.
Irdai charged the company with a penalty of Rs 5 lakh for adjusting balance premium of policyholders without their consent.
Adjustment of balance premium without consent of the policy holder is a violation of terms and conditions of the policy.
Any excess amount of deposit at the time of taking out the policy shall be refunded to the proposer in accordance with extant laws on refund of premium, said the order.
This indicates the life insurer’s casual approach towards adhering to the said regulatory requirements.
Hence as per the powers vested on the Authority, a penalty of Rs 5 lakh is imposed on the life insurer.
Another penalty of Rs 5 lakh was imposed for violating outsourcing norms by remunerating brokers in the name of contests.
Insurance brokers were remunerated in the name of contests, the payouts of which are above the prescribed brokerage.
The life insurer also made payouts to related party of a broker under the guise of an agreement, said the order.
With regard to contest to broker, the life insurer by floating contests, encouraged the broker to sell the company’s products to the prospective customers which may not be at their best interests.
Hence, Irdai levies a penalty of Rs 5 lakh on the life insurer, read the Irdai order.
The regulator also asked Max Life Insurance Company to be vigilant going forward to ensure non-recurrence of such lapses.
In a total of 17 charges, Irdai pressed on these two charges against Max Life; warnings were in six cases, while in rest of the cases, no charges were pressed.