The regulator has recently levied hefty penalties on a few insurance companies for violation of regulatory norms.
In a circular, IRDA has instructed that penalties for various acts of omission and commission have to be debited from share holder's account and not from policy holder's account.
"Penalties levied by the Authority shall only be debited to the shareholders’ account. In the event any insurance company has inadvertently booked the penalties to its policyholders’ account, the entries shall be reversed. Action taken in this regard may be confirmed to the Authority," says the circular.
A CFO of a top life insurance company said, "In the past, some insurance companies have booked the penalties to policyholders’ account. Hence IRDA has taken this step for consumer protection."