IRDA imposes fine of Rs 70 lakh on SBI Life Insurance

CHENNAI: The Insurance Regulatory and Development Authority (IRDA) has imposed a fine of Rs 70,00,000 on SBI Life Insurance company for paying around Rs.204 crore to eight of its corporate agents and six master policyholders, far in excess of the stipulated levels.

In an order Friday, IRDA asked SBI Life Insurance to pay the penalty within 15 days.

SBI Life Insurance is a 74:26 joint venture between State Bank of India (SBI) and BNP Paribas Cardif .

According to IRDA, payments were made by SBI Life in violation of laid down guidelines.

The company argued that the payments were reimbursement of administrative expenses incurred by master policyholders. But IRDA termed it as untenable.

IRDA had issued Group Insurance Guidelines under Section 34 of the Insurance Act stipulating the maximum percentage of commission payable to an agent in respect of group insurance policies.

Further, it had said, no payment will be made towards management expenses, document expenses, profit commission, bulk discount or payment of any other description to the agent or group organiser or manager or a master policyholder.

The payments were received from SBI Life Insurance by the agents and master policyholders between 2005-2010.

The eight corporate agents (associates of State Bank of India) and the six master policyholders are:

• State Bank of India- Rs 127 crore
• State Bank of Bikaner and Jaipur- Rs 8.44 crore
• State Bank of Hyderabad- Rs 13.25 crore
• State Bank of Indore- Rs 3.69 crore
• State Bank of Mysore- Rs 8.28 crore
• State Bank of Patiala- Rs 5.56 crore
• State Bank of Saurashtra- Rs 3.31 crore
• State Bank of Tranvancore- Rs 16.12 crore

Master Policyholders:

• Union Bank of India- Rs 6.13 crore
• United Bank of India- Rs 3.04 crore
• Sundaram Home Finance- Rs 1.56 crore
• Dewan Housing Finance- Corp Rs 4.26 crore
• The Federal Bank- Rs 3.34 crore
• Kerala Transport Development Finance Corporation- Rs 316,029

Source: EconomicTimes