Finding fault with two prominent general insurers in the country-ICICI Lombard General Insurance and Tata AIG General Insurance-, IRDAI has penalised both one crore rupees each for violating the insurance regulations.
The insurance regulator has pointed out that the ICICI Lombard General Insurance has not complied with the regulations on four counts and but has penalised the largest private sector general insurer with a fine of one crore rupees only on one count relating to the violations of regulations on Group Personal Accident policies and individual Personal Protect policies
“it is noted that ICICI Lombard General Insurer continued selling issuing Group Personal Accident policies with policy term of more than one year even after 1st July, 2013 and individual Personal Protect policies with policy term of more than 3 years even after 1st October, 2013, in spite of both the products not meeting the maximum policy term criteria as prescribed in the IRDA (Health Insurance) Regulations, 2013 and even after taking a certificate based approval from the IRDAI on modifying the product term in accordance to the IRDA (Health Insurance) Regulations,2013,’’ said IRDA in its rulings against the ICICI Lombard General Insurance.
The ICICI Lombard General Insurer had sold ‘Overseas Individual Student Insurance’ policy cover for a risk period of 730 days, whereas as per the product documents filed with the IRDAI, the maximum number of travel days that may be insured under the policy can be only for 365 days and may be extended only once beyond the initial period of 365 days during the trip duration by a maximum of additional 365 days.
The insurer should have brought the issue to the notice of the IRDAI informing the need for the change in the terms of the existing product and should have sought Authority approval by filing a revision under the File and Use Guidelines, said IRDAI ..
On Tata Aig General Insurance , the IRDAI has concluded that the company has violated of provisions of Reg. 3(2) and 3(3) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002
A corporate agent of the TATA AIG General Insurance has granted some loans to its customers inclusive of the premium payable by the customers to the general insurer.The policies were issued for a three-year period. However, renewal premium of subsequent three years was also collected at the inception and interest was charged by the corporate agent at the rate of 12.25% / 13% p.a. on the whole amount of loan granted (loan for first premium + renewal premium).
IRDAI in its rulings has said, the general insurer is expected to ensure that the consent of the client is obtained for paying advance renewal premium, as otherwise this may lead to serious market conduct issues.
“The insurer should be extra careful with a corporate agent which also has a lending business which may have potential conflict with the business of an insurance intermediary,'' said IRDAI.
“When the policyholder is given a loan by the corporate agent for the renewal premium which is payable three years later on, the policyholder ends up paying interest unnecessarily. Except stating that it presumed the consent of the policyholders, no documentary evidence of the consent of the policyholder to pay renewal premium in advance has been submitted by the general insurer. Thus, it is clear that the general insurer has violated Reg. 3(2) and Reg. 3(3) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002, said IRDAI .