The regulator has slapped a fine of Rs. 25 lakh on Sahara Life Insurance and Rs. 5 lakh on Aviva.
IRDA has imposed a fine of Rs.5 lakh on Aviva Life Insurance for revising mortality charges and modifying terms and conditions of its policies without taking prior consent of its policyholders. The insurance regulator said that such violation is against the fundamental principles that govern the contract of life insurance.
Taking a firm stand, IRDA has asked Aviva to refund money to policyholders within three months who have redeemed their investments from the unit linked and non-linked policies. The insurance regulator has instructed Aviva Life Insurance to pay an interest rate of 10% compounded half-yearly to such policyholders. “Interest on the difference amount at half-yearly compounding shall be paid from the date of exit/original settlement upto the date of the payment of difference amount, at the rate which is 2% above the bank rate (repo rate) prevalent as at April 1, 2014. The difference amount plus interest as above shall be met from the shareholders account of the insurer,” said IRDA through a circular.
The insurance regulator has asked the company to restore the number of units cancelled towards mortality charges and issue it to the policyholders who had invested in its ULIPs between 2008 and 2011. IRDA said, “Restore the number of units cancelled towards extra mortality rate (EMR) charge on the respective dates in the then prevailing segregated funds and allow the benefit of continuing as part of the underlying fund.”
Aviva has issued 8850 policies between 2008 and 2011 by levying extra mortality charges and 75 policies by modifying terms and condition without taking prior consent of policyholders.
In another such move, the insurance regulator has imposed a fine of Rs.25 lakh on Sahara Life Insurance for non-compliance of social sector obligations. The insurance regulator found that Sahara India Life failed to comply with the social sector obligation in the previous financial year. The company has helped 16,174 social sector lives against its mandatory target of 45,000 lives falling short of some 28,826 lives.
Both the companies were instructed to pay the penalty amount within 15 days or before November 18.