IRDAI has imposed a fine of Rs.10 lakh on Tata AIA Life Insurance and Rs.5 lakh on India First Life Insurance for violation of norms like luring distributors with gifts and rewards and paying out additional incentives to their corporate agents in the form of marketing expenses.
The insurance regulator has found that Tata AIA has made an additional payout of over Rs.16 crore to its corporate agent United Bank of India in the form of marketing and infrastructure support. The company was also found to have paid monthly production bonus to the bank. All these payments were over and above the permissible commission structure.
IRDAI said, “Payments other than commission made by the insurer to the corporate agent viz. United Bank of India (excepting the refund of commission claw back in the nature of miscellaneous payouts) are in violation of the provisions of the guidelines.”
In another case, IRDAI has imposed a fine on India First Life insurance. The regulator found that the company had paid an excess commission Rs.4.09 crore towards marketing expenses to its corporate agent Andhra Bank who is one of the promoters of the insurance company. Also, IRDAI found that the company had lured employees of banks with gifts/rewards and spent Rs.60 lakh on such activities.
Both the insurers have been asked to pay the penalty money by July 21.