IRDAI has imposed a fine of Rs. 5 lakh for violating group insurance guidelines. The regulator found that the company had paid money to group policyholders (GpH) in the name of market research, sales training, display of publicity material, etc.
In its reply to IRDAI, the company said that they had discontinued the contracts with group policy holders (vendors) in 2012 and had not violated IRDAI guidelines.
IRDAI regulations say that insurance companies should not make any payments as management expense or document expense, profit commission or bulk discount to the group organizer or manager.
“The contention of life insurer that the services offered by the company had no relevance to services offered under group insurance contract is not tenable because the group master policyholders are not engaged in the primary business of offering the services availed by the life insurer. It can be construed that the said arrangements were made to channelize extra payouts to the group master policyholders thereby violated the provisions of said group insurance guidelines. The life insurer has made considerable payouts under the guise of these agreements,” said the IRDAI order released today.
The insurance regulator has asked the company to pay the fine within 15 days from the date of this order.
In a separate order, IRDAI has asked the insurer to shift its data centres servers currently located in Singapore to be shifted in India by September 30, 2016 in order to comply with IRDA (Protection of Policyholders' lnterests) Regulations.