Insurance sector regulator Insurance Regulatory and Development Authority of India (IRDAI) has imposed a fine of Rs 4 lakh on SBI Life Insurance Company Ltd for violating regulations on advertisements as well as protection of policyholders’ interest.
The IRDAI has stated that it found that provisions prior to the Insurance Laws (Amendment) Act, 2015, were incorporated instead of new provisions.
Besides, the provisions of Section 45 of Insurance Act, 1938, which deals with advertisements and disclosure norms were not properly reflected, IRDAI stated.
Earlier, the IRDAI had examined samples of proposal forms signed on November 30, 2016, December 23, 2016, February 17, 2017 and March 23, 2017.
IRDAI stated that the dates on which samples were examined almost two years after promulgation of Insurance Laws (Amendment) Act, 2015, indicated a casual approach of the life insurance company in adhering to regulatory norms.
The IRDAI order stated that a proposal form is the basis of the contract and provisions of the referred sections of Insurance Act, 1938, should be clearly and correctly mentioned.
Any lapses on the part of the life insurer not only violate provisions of regulations but also indicate lack of proper internal controls in usage of applications for insurance, which may jeopardize the interests of the prospects or insured, the IRDAI order read.
The IRDAI order stated that due to this reason, “a penalty of Rs 4 lakh (Rs 1 lakh for lapse noticed in each of the four proposal forms) is imposed on the life insurer,” as per the powers vested in the IRDAI under Section 102(b) of the Insurance Act, 1938.
The IRDAI also directed SBI Life to ensure non-recurrence of such lapses.