Hyderabad:
The insurance regulator IRDAI has imposed a fine of Rs 8 lakhs against Kolkata based Salasar Services Insurance Brokers for misleading its customers on business interruption(BI) claims during Covid-19 pandemic period.
According to the IRDAI, the broker had issued information brochure advising their clients to lodge claims for loss of net profits and net charges due to business interruption under SFSP/ IAR/Mega policies due to Covid-19 pandemic. It further suggested that insurers, prima facie may deny the liability which can be contested later on, on merit. The brochure also stated that it is hopeful that IRDAI, GIC Re or Government of India may intervene in due course to ensure that such BI claims by the policuholders were paid .
Salasar Services Insurance Brokers , by giving wrong and misleading advice to the clients/policyholders acted in an unprofessional manner and did not discharge its functions in the interest of the policyholders, said the IRDAI.
The broker has not conducted its dealing with utmost good faith and integrity and has given wrong and misleading advice to lodge claims when they knew such losses are not covered and gave false hopes to clients. Hence they acted without due care and diligence, said IRDA in its penalty order. .
The broker who is operating since 2003 is well aware that the BI) policy in India covers losses under this policy only if the claim under Material Damage section is admissible. The information brochure by Salasar Services Insurance Brokers clearly advised Salasar's clients, in the interim, to lodge the claim and also stated that insurer prima facie may deny the claim which can be contested later, explained the IRDA.
“This statement may give a hope to the clients that the denial of claim can be successfully contested at a later date. This is a wrong and misleading advice and the broker, being a professional should not issue such a misleading advice to their clients,'' clarified the IRDAI..
The clients depend on the broker for a professional advice and any wrong/misleading information/advice given to them by the broker may have serious consequences, cautioned the insurance regulator
The submissions by the broker that “no client has filed a claim”, “no new clients have been taken by the broker” are not acceptable. The advice of the broker to 'later contest the matter on merits' also has adverse financial consequences in the form of unnecessary litigation costs for the client and insurer, added the IRDAI.
“The IRDAI was imposing a monetary penalty of Rupee one lakh per day on the broker for the violation period of eight days which amounted to Rs 8 lakh from the date on which the brochure was introduced i.e. Apr 13, 2020 to the date when the brochure was withdrawn i.e Apr 20, .2020,'' said the IRDAI.