Of the Rs. 1.77 crore penalty, Rs. 65 lakh was imposed for soliciting business through unauthorized or non-licensed entities.
IRDA has imposed a of Rs. 1.77 crore on Reliance Life Insurance for violation of various norms like soliciting business through multilevel marketing, paying additional payment for advertisement and publicity and delaying claim settlements. The insurance regulator has examined 47 such violations of the company.
IRDA has found several instances of multi-level marketing in which the company sourced business through unauthorized or non-licensed persons/entities with the help of forged signatures. In fact, in some cases, the regulator found that the company had obtained leads through corporate firms for which it made an additional payout to these firms in form of advertising and marketing expenses. Out of the total penalty, the maximum charge of Rs. 65 lakh was imposed for soliciting business from non-licensed entities.
IRDA observed that in some instances the company had delayed claim settlement under partial withdrawal facility of ULIPs.
Meanwhile, the regulator found that a few death claims were settled in favour of master policyholders as against beneficiaries under group insurance policies. IRDA slapped a fine of Rs. 25 lakh and directed Reliance Life to issue cheque in favour of nominee of policyholders under such policies. Also, the company had made payout to a master policyholder towards marketing and advertising expenses for which it was fined with Rs. 5 lakh.
The insurance regulator has asked Reliance to pay the fine within 15 days or by April 26, 2014.
Other violations by Reliance Life for which IRDA has slapped fines:
- Increasing exposure in equity and debt instruments above prescribed limits
- Transferred share to employees under employee stock option without prior approval
- Huge payment made towards referral fees-contests
- No accounting provisions were created in the financials for Premium Waiver Benefit (PWB) which is feature products like Reliance Secure Child Plan and Reliance Child Plan.