The Insurance Regulatory and Development Authority (IRDA) has levied a penalty of R50 lakh on SKS Microfinance for alleged violations committed while selling insurance policies, including charging high premiums to its clients.
The microfinance institution (MFI) was granted a licence to act as a corporate agent of Bajaj Allianz till December, 2011. Besides, it also offered policies of LIC and ING Vysya during 2009-10.
In its order to the company, the regulator said, ?Considering the violations committed by the MFI and keeping in view the work being done it in the micro insurance sector, the authority hereby directs the MFI to remit a penalty of R50,00,000 within 15 days from the date of receipt of this order.?
As per Irda’s findings, SKS has levied charges greater than the premium amount, violating the Clause C1 of the Group Insurance Guidelines. ?It is clear that about half of the amount charged is actually service charge and was not disclosed to the members as an additional cost. Hence, this is certainly a deliberate lapse on the part of the master policyholder,? J Hari Narayan, IRDA chairman, who demitted office on Wednesday, said in the order.
Following many complaints, IRDA had conducted an on-site inspection of the MFI at its office in October 2010.
