IRDAI penalises Reliance Life Rs85 lakh for norm violations
08 August 2015
The Insurance Regulatory and Development Authority of India has slapped a penalty of Rs85 lakh on Reliance Life Insurance Co Ltd for violation of various norms, including outsourcing guidelines.
''A penalty of Rs85 lakh shall be remitted by the Life Insurer by debiting the shareholders' account within a period of 15 days from the date of issuance of this order," IRDAI said in an order issued by its chairman T S Vijayan.
The IRDAI imposed a fine of Rs30 lakh on Reliance Life for making payments to Premier Training Pvt Ltd (PTPL), violating outsourcing guidelines.
PTPL was engaged to perform a customer contactablity programme with very commercial terms of Rs500 per policy. The penalty included for financial years 2011-12, 2012-13 and 2013-14.
"Agreeing to pay at the rate of Rs500 per policy towards customer contactability from the existing policyholders in remote areas irrespective of the underlying premium is on a higher side.
"The Life Insurer has not substantiated how the Company has derived benefits in terms of renewing the business (policy or premium)," said the order.
Penalties of Rs20 lakh and Rs15 lakh were imposed for making higher payment to CRP Technologies in violation of outsourcing guidelines, as per the order document.
Pulling up the company for violating norms, IRDAI said that the board of the life insurer did not have adequate procedures in place to ensure regulatory compliance.
It also asked the company to review its corporate business policy and define the standards of business conduct and ethical behavior.
"The authority has taken a serious note of non-compliance to the directions issued in the final order ... and hereby expresses its displeasure and concern to the Board of the Life Insurer," it added.