Pursuant to Insurance Law Amendment Bill, IRDAI has incorporated a few amendments in the guidelines on appointment of insurance agents.
The insurance regulator has come out with a gazette notification in which it has mandated to impose a fine of up to Rs. 1 crore on insurance companies for mis-selling and violation of code of conduct of their agents.
Earlier, The Insurance Bill had sought to give more teeth to the insurance regulator. It was proposed that IRDAI can impose hefty fines on insurance companies if their agents mis-sell.
In the notification, IRDAI said, “The insurer shall be responsible for all acts and omissions of its agents including violation of code of conduct specified under these regulations and shall be liable to a penalty which may extend to one crore rupees.”
For violating the code of conduct or mis-selling, the insurance regulator can impose a penalty of up to Rs. 10,000 on insurance agents. “Any person who acts as an insurance agent in contravention of the provisions of the Insurance Act, 1938 and Regulations made there under shall be liable to a penalty which may extend to Rs.10,000,” said IRDAI.
The insurance regulator has further clarified that insurers will have to pay a fine of up to Rs. 1 crore if they appoint any unauthorized person as an agent or sales representative.
Also, the regulation has restricted insurance agents to become directors in the insurer’s board.
