After imposing a fine on Shriram Life Insurance earlier this month, IRDA has penalised another life insurance company on the observations made during an onsite inspection in 2010. ICICI Prudential Life Insurance Company, one of India’s leading life insurers has been asked to remit Rs.114 lacs as penalty to the Insurance Regulatory and Development Authority (IRDA).
IRDA observed that Insurer is in practice of paying non-compete fee apart from commission to the Corporate agents (CA). The report prepared by the regulator mentioned that other payouts in the name of Branch level marketing and promotional activities, customer awareness programmes, market feedback & other related activities were being paid to the CAs without any proper agreement in place. For this violation, IRDA imposed a fine of Rs.40 lakhs on the insurer.
The report states that ICICI Prudential is creating multiple code numbers for single corporate agent and brokers based on the location of the business procured. From the inspection, the regulator found out that there are several cases where the number of Specified Persons is grossly disproportionate to the number of locations in which the Corporate Agent is functioning. IRDA regards this violation as a significant violation because it encourages sale of insurance by unqualified persons and opens gates to several malpractices such as mis-selling, multiple level marketing etc. And so it fined the company an amount of Rs.11 lacs for this violation.
The act of ICICI Pru remunerating infrastructure fee (upfront) and costs towards space for insurance specialists, insurance corner space, advertising, etc to its referral partners is noted as a violation by the regulator.
Apart from commissions, huge other payouts are made to Brokers in the name of Branch level marketing, promotional activities, customer awareness programmes, market feedback & other related activities
IRDA has observed certain violations of rules by ICICI Prudential and has therefore directed the company to pay up a fine of Rs. 1.18 crore.