The Insurance Regulatory & Development Authority (Irda) has cracked the whip on some state-owned general insurers and a few private insurance companies for flouting norms.
But, unlike banking regulator Reserve Bank of India, the insurance regulator does not publicise such moves immediately after making them.
Also, unlike the RBI, Irda has penalised some insurers up to Rs 5 lakh for not being able to meet the mandatory social sector obligations. Both New India Assurance and Shriram Life Insurance have faced regulatory action because of this.
Other prominent insurers that have been fined Rs 5 lakh include Bajaj Allianz Life Insurance, Bajaj Allianz General Insurance, Reliance General Insurance, IFFCO Tokio General Insurance and United India Insurance.
Bajaj Allianz Life Insurance was penalized under Section of 102(b) of the Insurance Act, 1938 for opening offices without the permission of the Irda. Bajaj Allianz General Insurance was fined for violating the Irda Advertisement Regulations.
Reliance General Insurance was fined Rs 5 lakh for violating the provisions of Section 102 of the Act. The company was also asked to pay Rs 1.62 lakh for submitting late an application for the renewal of registration. Another state-owned company, the Agriculture Insurance Corporation, was fined Rs 5.56 lakh for a similar slip-up.
The insurance regulator penalised IFFCO Tokio General Insurance with a fine of Rs 5 lakh for engaging a non-licensed entity as an intermediary.
State-owned United India Insurance was fined Rs 5 lakh for charging a lower premium for Pravasiya Bhartiya Bima Yojana.
During 2006-07, the insurance regulator had received 861 complaints against the life insurers, of which 41% were against state-owned Life Insurance Corporation.
Most of the complaints relate to inadequacies of service or incomplete disclosure of the terms of contracts. Irda also conducted inspections on 11 broking companies in 2006-07. As a follow-up action, one licence was suspended, one was cancelled and four voluntary surrenders of licences were accepted.
During the inspection, it was observed that some of the broking companies had exceeded the limits set in Regulation 20 while procuring business from a single client.
The inspection also revealed that, in some cases, payments were made to introducers and canvassers in contravention of the code of conduct defined in the insurance regulations.