IRDA ruled saying that the payments made by the insurer to the corporate agent viz., United Bank of India other than commission are in violation of the law. Earlier, the insurer was penalized for excess payouts to corporate agents in the financial year 2010-11 and in the financial year 2011-12. As such excess payouts observed in the FY 2012-13 has been treated by the regulator as a repeated violation.
The insurance regulator announced its decision in a circular dated 6th July 2015:
- Penalty of Rs.10,00,000 (Rupees Ten Lakh only)
- The Chief Executive Officer (CEO) of the Company shall furnish a compliance certificate duly approved by the Board that no agreement with the Corporate Agents exists which is in violation of Clause 21 of the Corporate Agent Guidelines, 2005 or Section 40A of the Insurance Act, 1938 as on date. Any agreements which may presently be in violation of the guidelines shall be discontinued forthwith
- The insurer is further directed to strictly adhere to the Act/ Regulations/ Guidelines /Circulars issued in this regard from time to time.