IRDAI has imposed Rs.16 lakh penalty on IDBI Federal Life Insurance for violating norms like paying higher commission and for paying death settlement claim in favour of master policyholder.
Of the total Rs.16 lakh, Rs.10 lakh was imposed for paying higher commission in form of ‘Kind’ (gold coins, gold vouchers, gift vouchers, foreign trips, motorbikes, etc.) under ‘selling and distribution expenses’. The commission was paid in the form of contests to branch staff. IRDAI said that any contest should be considered as marketing expense only if the contest is run for corporate agents. Payments made in kind to employees is a violation of IRDAI rules.
Another Rs. 5 lakh was imposed for making additional payouts under ‘selling expenses’ over and above the approved commission structure. The total remuneration paid to individual agents consisting of basic commission, bonus commission and selling expenses exceeded 40% of the first year premium.
The company has been fined Rs.1 lakh for paying death settlement claim to master policy holder under non-employer-employee group policies.
IRDAI has asked IDBI Federal Life Insurance to pay the penalty money by November 19.