IRDAI has imposed a fine of Rs.50 lakh on L&T General Insurance for violating various norms like offering hefty discounts to a few policyholders, soliciting business through unauthorized agents, issuing policies without proposal forms on renewals and receiving direct business from its sponsor company L&T Finance. The insurance regulator has examined 49 such violations of the company.
Of the total Rs.50 lakh, Rs.20 lakh was imposed for offering hefty discounts to a few policyholders which was over and above the approved level. The insurance regulator has found that the company had offered a discount of 25% in motor insurance policies as against a maximum approved limit of 10% at its discretion. In fact, such discounts went up to 51% in a few instances.
IRDAI has found that the company had renewed policies without any proposal form. The insurance regulator found that the company doesn’t have the practice of processing fresh proposal forms during renewals.
It was found that the company had issued group insurance policies at a premium which were not in the line with the approved premium amount during product filing. In a few instances, the insurer was found to have issued such policies even before receiving premium amounts.
The insurance regulator found that third party administrators or TPAs empanelled with the insurer had increased the deductible limit in a few instances under health insurance policies. Deductible is the amount which policyholders pay for expenses before insurers cover the remaining costs.
Also, the company was found to have solicited policies through unauthorized agents.
Meanwhile, the insurance regulator has found that the company had received direct business from its sponsor L&T Finance. The insurer was found to have directly issued a group policy to its sponsor without any proposal form.
IRDA has asked L&T General Insurance to pay the penalty money by August 18.