IRDAI has imposed a fine of Rs.40 lakh on Reliance Nippon Life for violating various regulatory norms like incentivizing agents and brokers through outsourcing activities, collecting documents for KYC from unauthorized agents and sharing customers’ database with their agents.
On inspection, IRDAI found that Reliance Nippon Life had appointed a computer training company PTPL for customer contact. However, PTPL made payments to India Infoline Insurance Services and India Infoline Brokers. Since, both of them are insurance intermediaries for Reliance Nippon Life, the insurance regulator found that the life insurer had violated outsourcing norms to pay additional incentive to its agent and broker.
The insurance regulator further found that the company had a tie up with CRP Technologies for collection of KYC documents. IRDAI norms do not allow any company other than insurer and intermediaries to collect KYC documents of customers. IRDAI said, “The need for such activity and outsourcing the same to third party service providers especially to collect the contact details of the existing policy holders is not justified by Reliance Nippon Life, where the agents who solicited these policies are expected to and can easily contact and provide the contact details, if any, of their policyholders.”
Among other key violations, the insurance regulator has found that the insurance company has shared database of its customers with their agents to distribute their policies.
IRDAI has asked Reliance Nippon Life to pay the penalty money within 45 days.