IRDA has imposed a fine of Rs 2 lakh on Future Generali Life India Life Insurance for paying higher commissions than what is permitted to its corporate agents – M/s Sena Life Care and Vinayak Assurance Service during the financial year 2009-10. IRDA found that the insurer gave incentives to these corporate agents in the form of advertisement and publicity costs.
As per the Insurance Act 1938, 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. Also, an insurer cannot reimburse its corporate agents for co-branded advertisements.
IRDA data shows that the Future Generali Life Insurance has paid an excess commission of Rs 5.88 lakh and Rs 2.43 lakh to M/s Sena Life Care and Vinayak Assurance Services respectively.
Earlier, the authority had sought explanation and clarification in the matter from the company. The life underwriter had presented its case before IRDA in June this year. IRDA had also called for the invoice copies raised by the corporate agent to examine the case.
Out of Rs 2 lakh imposed on Future Generali Life Insurance, the insurance regulator has imposed penalties of Rs 1 lakh each for paying additional commissions to both the corporate agents.
The insurance regulator has asked Future Generali Life Insurance to pay the penalty within 15 days from the date of order i.e. on or before October 11, 2013.