IRDA rejects HDFC Standard Life plea against earlier order
18 January 2014
The Insurance Regulatory and Development Authority on Friday rejected a plea by insurance company HDFC Standard Life and told it to comply with directions given in September 2013 to reopen all 'settled' death claims and pay an increased amount under two of the insurer's policies.
Ruling on HDFC Standard Life's representation on 6 December 2013, IRDA chairman T S Vijayan directed the company to comply with its earlier order.
"On examining the matter, the authority did not find any new information or mitigating facts which were not already taken into consideration while issuing such directions, and therefore the representation submitted could not be considered," Vijayan said in his letter to HDFC Life.
In its September order, the IRDA had found HDFC Life discriminating between two sets of policyholders - those who had bought the HDFC Life Sampoornam Samridhi Plan or the HDFC Classic Assure Plan before 31 March 2012 and those who bought the policies even a day later, after 1 April 2012. The latter got a higher benefit though the premium remained the same.
The IRDA said HDFC Standard Life altered the insurance value through an endorsement assuring additional death benefits which is equivalent to 10 times more than annualised premium or the death benefit as defined in the policy under two of its products for those who bought the policies on or after 1 April 2012.
For those who bought the products prior to that date, the death benefits payable were the basic sum assured, reversionary bonus plus interim and terminal bonuses, if any.
The company debited to its shareholders' account the additional premium amount for the higher cover for those who bought the policies on or after April 1, 2012.
The IRDA did not agree with the insurer's contention that the additional benefit was offered to those who bought the policies on or after 1 April 2012, as the rules relating to tax exemption were changed.
Terming the insurer's action as discriminatory between the two sets of policy holders, the IRDA directed the company to reopen claims on policies prior to that date (from the date of launch of two policies) and settle the additional amount within 60 days of the order.
HDFC Standard Life is a joint venture between Housing Development Finance Corporation Ltd and the UK's Standard Life Plc.