IRDA fines Reliance Life Rs10-lakh for violations
17 November 2010
Insurance regulatory IRDA has slapped a Rs10-lakh fine on Reliance Life Insurance Company for violation of regulatory norms.
The company has been served a show-cause notice for having paid excess referral fees than envisaged in the referral guidelines.
In its reply, the company has accepted the lapse and has clarified that the fee was paid in anticipation of business volumes to be generated as per initial commitments. According to the IRDA, this act violated its guidelines.
In another observation, the regulator has found that the company opened several offices without seeking necessary approvals.
Noting that the company contracted business in a unit with an identifiable code number relating to a branch, for which the IRDA had not granted approval, the regulatory authority contends that such business was normally booked only for the purpose of management information system (MIS) for internal monitoring. This is not acceptable, the IRDA notes.
IRDA points out that if the intention was to establish the viability of an office at a given location, such an assessment could have been carried out by other means. The IRDA observes that there are several examples where branches occupy the same building and quite often the same floor of a building.
Additionally, the IRDA inspection team found that the company had outsourced key jobs related to issue of licences and thus violated the laid down procedures. The company has pointed out that co-sourcing of licensing process was a legacy of AMP Sanmar Life Insurance Company in the past.