The regulator has imposed a
fine of Rs. 55 lakh on Max Life Insurance and Rs. 31 lakh on Canara HSBC
Oriental Bank of Commerce for violation of various norms.
IRDA
has imposed a fine of Rs.55 lakh on Max Life Insurance for outsourcing the work
to collect renewal premium without taking prior approval and paying flat fees to
such agencies (irrespective of premium amount) in the form of service charges.
The
insurance regulator found that the insurance company has outsourced the work to
collect renewal premium from small cities and town. Further, the insurer was found
to have paid flat fee of Rs.600 for collection of renewal premium and Rs.1,700
for proposal form in the form of processing fees, irrespective of premium
amount. The insurer had not taken IRDA’s approval to carry out such activities.
In its
order, IRDA said, “On an examination of the fee paid vis-à-vis the services
outsourced, it is considered that service fee agreed and paid to the service provider
is disproportionate to the nature of services and the life insurer did not
carry out any cost-benefit analysis as envisaged in the guideline, thereby
violating the provisions.”
In
another such move, IRDA has imposed a fine of Rs. 31 lakh on Canara HSBC OBC
Life Insurance for violation of various norms such as luring employees of corporate
agents with gifts/reward and
discrepancies in claim settlement.
The
insurance regulator found that the company had lured unauthorized sales persons
of their corporate agents with gifts and rewards. The payout was over and above
the commission. Also, the insurer was found to have spent close to Rs.14 crore on
training programs for unauthorized sales persons and staff of the corporate
agents.
In a
circular, the regulator said, “Rewarding of specified persons, other employees
and senior management with gifts/foreign tour, the qualifying criteria being
achievement of campaign targets, cannot be construed as training imparted. The
life insurer is further directed to discontinue the practice of gifts/rewards
and recognition programs in the name of training the staff of corporate agent
and ensure strict compliance with the regulation.”
Meanwhile,
IRDA found that the company had settled the claims in favour of master policyholder
under group insurance policy as against the beneficiary of such policies.
