The Irda has charged SBI Life Insurance Life of violation of various norms by mis-selling the policy and payment of higher commission to agents.
We are confident that a fair outcome will prevail subsequent to the presentation of our case with the appropriate authority. SBI Life Insurance remains committed towards ensuring highest level of customer transparency and customer centricity, it said. While SBI chairman Arundhati Bhattacharya is the chairman of the insurance firm, Atanu Sen is the MD & CEO. SBI Life Insurance will appeal to the Irda chairman, an official said.
SBI Life Insurance has been asked to refund the amount within six months.
The amount of Rs 275.29 crore to be refunded as directed in these orders shall be debited to shareholders account, Irda had said in an order on Tuesday. SBI holds 74 per cent stake in SBI Life Insurance while BNP Paribas Cardif has 26 per cent. The refund amount works out to 44 per cent of the Rs 625 crore premium it had collected under the scheme.
The order was issued after an enquiry that revealed SBI Life Insurance was charging the second year premium along with the first year premium on its Dhanaraksha Plus Limited Premium Paying Term (LPPT), a group insurance policy. It relates to polices issued during FY9, FY10 and FY11.
The premium collected in more on lines of a single premium than two yearly regular premiums against the approved file and use features, the order said. Irda noticed that 99.99 per cent of the total premium procured under the LPPT product was sourced by corporate agents of the life insurer belonging to SBI Group. The insurer has paid 40 per cent of first year premium as first year commission and 7.5 per cent of second years premium as second year commission.
However, had the single premium version of product been offered to the policy holders, the actual commission payable would have been only 2 per cent. Hence it can be concluded that the large scale sale of LPPT as single premium payment policy has only facilitated higher commission payments to insurance intermediaries involved who are predominantly SBI and its associate banks, the order said.