The Insurance Regulatory and Development Authority (IRDA) has levied a fine of Rs.1,47,00,000 on HDFC Standard Life Insurance Company Ltd basis their onsite inspection done in July 2010 at HDFC Life’s premises.
The officials at IRDA observed that sums ranging from Rs 0.06 Crores to Rs286.92 crores were paid to HDFC, HDFC Bank, HDFC Securities and HDB Fin Services who are the “Corporate Agents” of the Insurer under guise of utilising network for marketing and advertisement campaigns. IRDA concluded that there have been seven instances of wrongful payment and thus imposed a penalty of Rs.5 lakh for each incidence amounting to a total of Rs.35,00,000. IRDA fined Rs. 5 lacs to the Insurer as it had solicited and procured business from some unlicensed entities and it is being logged in the name of specified persons of Corporate Agents.
In 2003, HDFC had filed for Home Loan Protection Policy, which included a provision of waiting period of 90 days for consideration of death claim. IRDA had specifically directed the insurer to remove all exclusion clauses including the clause relating to 90 day waiting period. But a few cases were found where 21 death claims were rejected on the ground that death occurred within the so called waiting period of 90 days. For this gross and serious violation, the regulator has imposed a penalty on each occurrence of up to Rs.5 lakhs summing up to a total penalty of Rs.1,05,00,000 (One Crore Five Lakhs only) for this particular violation.
Further, the Insurer is directed to reopen all the 21 rejected claims and settle them within thirty days of receipt of this order. Insurer is also directed to forward a communication as an endorsement to the original policy contract specifically deleting the clause in respect of all the policy contracts that were issued since the launch of the product and are in force.
A total penalty of Rs. Rs 1,47,00,000 (Rupees One Crore Forty Seven Lacs Only) has been levied on HDFC Life by IRDA for failing to achieve compliance of the regulations.
