The Insurance Regulatory and Development Authority (IRDA) has imposed a fine of Rupees Six Lakhs on SBI Life Insurance Company Limited on violation of certain norms.
SBI was questioned on 21 charges and asked to submit its clarification. After going through SBI’s responses to the charges, IRDA did not impose any penalty on 19 charges and penalised SBI Life on two counts alone.
SBI filed Dhanaraksha Plus as a Limited Premium Paying Term (2years) Group product and sold it as a Single premium product against the approved F&U norms by receiving second year’s premium in advance along with first year’s premium. Further, a discount of 4% on the advance premium is given. SBI did not obtain prior approval under File and Use for giving 4% discount on the premium and hence IRDA came to the conclusion that the Insurer has adopted business policies in violation of prescribed norms, as under:
Two year policies sold as Single Premium Policy in violation of File & Use Guidelines.
No informed choice given to the members of these group insurance policies whether to pay two yearly instalments at one go or as a single instalment
Paying excess commission to Corporate Agents (predominantly, SBI and its associate Banks, promoters of SBI Life) over and above the eligible 2% commission they would have otherwise eligible had the Single Premium version of the policy been offered
For these above mentioned violations, IRDA levied a penalty of Rs 5,00,000 on the insurer.
In another charge with regards to the payment of claims favouring Master Policy Holders SBI was fined Rupees One lakh. The submissions of SBI Life suggested that the claim cheques are issued in favour of the Bank / NBFCs along with the name of life assured and the loan account number. This is in violation of the clause that envisages the payment of claims in favour of beneficiaries of members.
SBI Life which was awarded the most coveted NDTV Profit Business Leadership Award, twice in a row, 2010 & 2011 has to pay a total of Rupees Six Lakhs.
