IRDAI has imposed a fine Rs.10 lakh on Max Life Insurance for not refunding the excess premium amount and paying additional incentives to their agents through contests.
The insurance regulator has found that Max Life has not refunded the excess premium amount to their policyholders which was charged during the proposal stage. Typically, insurance companies quote tentative premium amount during the proposal stage which can be higher or lower than actual premium based on the risk assessment of underwriters.
Instead, the insurance company has either set off this premium amount with future renewal premium or adjusted it with ‘top up’ premium without intimating the policyholders. Top up is the additional amount over regular premium that the policyholder can invest to get returns.
In another such violation, the insurance regulator has found that Max Life Insurance had floated a contest in which the company has incentivized agents who had achieved certain sales target. The company is found have paid additional 2% brokerage which was over and above the stipulated commission structure of brokers.
The regulator has asked the company to pay the fine within 15 days i.e. before July 13, 2016.