Reliance General Insurance Company (RGIC) is yet to decide whether to appeal against the IRDAI order in the Securities Appellate Tribunal, said the company sources
Hyderabad:
Insurance regulator IRDAI, in an order last week, has imposed a fine of Rs 2 crore against Reliance General Insurance Company(RGIC) for breaching motor insurance service provider (MISP) guidelines and appointing in-house employees to assess losses beyond Rs 50,000 in motor insurance.
SN Rajeswari, member, Distribution and PK Arora, member, Actuary after conducting a detailed hearing, had passed the order.
RGIC is yet to decide whether to appeal against the IRDAI order in the Securities Appellate Tribunal(SAT), informed the company sources.
RGIC ,during 23rd August and 31 August 2018, had violated the rules by appointing in-house employees to assess the loss beyond Rs50,000 in motor insurance, said the IRDAI order.
Earlier, IRDAI had issued a show-cause notice after conducting an on-site inspection of the insurer .
During its inspection, the regulator spotted that the insurer appointed in-house employees to assess the loss beyond Rs 50,000 under motor insurance. There were 558 such cases in the financial year (FY)16-17 and 467 cases in FY17-18.
RGIC had explained that the survey work was carried out beyond Rs50,000 only in 482 cases by its employees out of a total 4.32 lakh cases.
The main reason for such in-house survey was that these cases were scattered in type c cities in 208 locations, where to get the licensed surveyors appointed is difficult due to the scarcity and would have resulted in non-settlement of claims. Even for these cases, there were no complaints from the customers, RGIC had submitted before the IRDAI.
IRDAI had rejected the submission of RGIC
“The IRDAI (Insurance Surveyors and Loss Assessors) Regulations do not permit the insurer to make exceptions on the ground that the cases were scattered in type c cities. One of the objectives behind Regulations 12(1) and 12(2) is to eliminate the bias, and conflict of interest and to get the claim assessment done by an impartial IRDAI licensed professional with adequate qualifications and training. The violation has continued for a period of more than two financial years,’’ said the IRDAI’s order.
Further, the IRDAI had detected that RGIC had violated MISP Guidelines by paying Rs76.21 lakh to Advaith Motors for various services between 23 November 2017 and 16 July 2020 for other professional, technical and business services, which is contradictory to the insurer’s explanation that the amount was paid for sponsorship events.
“The objective of MISP Guidelines is to recognise the role of motor dealers in distributing and servicing motor insurance policies so as to effectively monitor the dealers’ activities connected to insurance. More importantly, the Guidelines are brought out to check undesirable practices in the market like payouts to motor dealers made by insurers at the expenses of policyholders under different head of management expenses.” said the IRDAI order.
In another development, the regulator has slapped a fine of Rs 1 lakh on Anmol Medical TPA for violating the rule mandating to not lend or grant any loan to any other company, entity or individual not connected with TPA business.
Anmol Medical TPA had granted loan to individual other than its employees and even after being brought to its notice by its own auditor and violated code of conduct, said IRDA’s order.