Insurance regulator Irda today imposed a fine of Rs 1.77 crore on Reliance Life Insurance for violation of various norms including obtaining business from unlicensed entities.
"...the penalty of Rs 1.77 crore shall be remitted by the Life insurer by debiting shareholdersí account within a period of 15 days from the date of issuance of this order...," Irda said in an order.
It is observed that the Life Insurer has failed to monitor the activities of the corporate agent, it said, adding that this is considered as a serious lapse and the insurer is warned for the same.
Insurance Regulatory and Development Authority (Irda) examined 47 charges leveled against the company including violation of advertisement and product distribution norms.
Instances are noticed where the business is sourced from unlicensed entities through Multi Level Marketing and was logged into the code of licensed entities, it said.
Business was procured by forged signatures or without signatures at the space specified in the agents confidential report column, it added.
Of the total charges, maximum penalty of Rs 65 lakh was imposed for soliciting insurance business from unlicensed entities.
Irda said the business sourced through unlicensed entities was logged in various code numbers of Reliance Third Party Distribution Channel, which is one of the new business verticals of the insurer.
"Hence, under powers vested in Section 102(b) of the Act, a penalty of Rs 60 lakh is levied on the life insurer," it said.
The regulator also slapped a fine of Rs 50 lakh for violation of marketing and publicity norms.
There was issue with regard to payments to referral entities under contests.
"It is observed that the insurer has made these payments to referral entities under contests in violation of provisions of Circular Ref. Irda/Cir/004/2003 dated 14/02/2003 and therefore a penalty of Rs 5 lakh is hereby imposed under Section 102(b) of Insurance Act, 1938," it said.
Recently, Irda asked SBI Life Insurance company to refund Rs 275.29 crore to the policy holders as the amount was collected from them in violation of norms.