IRDAI has imposed a fine of Rs.15 lakh on HDFC Standard Life for violating various regulatory norms like file and use guidelines, soliciting policies through unauthorized agents and incentivizing its distributors through junkets.
IRDAI found that the insurance company had incentivized employees of corporate agents through foreign trips from the fund allocated for skill development of intermediaries.
IRDAI said, “As per the documentary evidence on record, the criteria for the selection of candidates for foreign trips are based on specific volume of business procured. Upon examination of explanation of the life insurer, they agreed that they had sponsored employees other than specified persons also for succeeding in the competition. Though the payouts in regard to foreign trips were made to third party vendors, the beneficiaries are the employees/specified persons of the Corporate Agent. Hence, it can be inferred that the incentives were in a way paid to the employees/specified persons only. Further offering financial or non-financial incentives directly to the employees/ specified persons cannot be accepted. Any competition floated shall be made applicable only at Corporate Agent level.”
As per regulations, an insurance company shall not pay any amount other than the permitted agency commission, whether as administration charge, reimbursement of expenses, profit commission or any other form to corporate agents.
Further, the insurance regulator has found that the company had solicited insurance policies through unauthorized agents. “It is evident that the corporate agent and the life insurer has engaged unauthorized persons (employees other than specified persons in this case) in solicitation of insurance,” said IRDAI.
IRDAI has directed the life insurer to discontinue such practices and asked them to pay the penalty within 21 days from the date of the issuance.