IRDA slaps fine of Rs 3.10 cr on Bajaj Allianz Life

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New Delhi: Insurance regulator IRDA imposed a hefty penalty of Rs 3.10 crore on Bajaj Allianz Life Insurance for violation of various norms, including those related to early-death claims and group insurance. "...as directed under the respective charges, the penalty of Rs. 3.10 crore shall be remitted by the life insurer (Bajaj Allianz Life) by debiting shareholders' account...," the Insurance Regulatory and Development Authority (IRDA) said in an order.
The fine has to be paid within 15 days, it said. The regulator imposed a fine of Rs 78 lakh for rejecting certain early-death claims as un-concluded contracts. These relate to cases where insured persons died after the date of commencement of risk but before receiving the policy document.
It noted that this was a violation of File and Use Guidelines. The life insurer repudiated 78 cases during 2010-11 on grounds of un-concluded contracts. "While noting the submissions that the life insurer has decided to re-open all the repudiated cases on grounds of un-concluded contracts and also discontinued the said practice, it is considered that the actions of the insurer are not fair and against the interests of the policyholders..." it said.
It added that the insurer is warned against wrongful claim practices and directed to ensure settlement of claims in fairness, both as per terms and conditions of the policy contract and as per regulations.
Bajaj Allianz also violated norms by entering into referral arrangements with entities that were not licensed to act as corporate agents or insurance intermediaries for the sale of group insurance products, the regulator said.
"By entering into referral agreements and making payments to group policy holders, the insurer has grossly violated Clause B-2 of Group Guidelines," IRDA said. Therefore, it said, under powers of the Act, a penalty of Rs 70 lakh is levied on the life insurer. 
Bajaj Allianz has been slapped with a Rs 20 lakh penalty for making certain payments towards advertisement, marketing and infrastructure support in violation of corporate agents' guidelines.
IRDA has imposed a Rs 20 lakh penalty on the company for making various payments to master policy holders during 2009-10, 2010-11, 2011-12 and 2012-13 in violation of Group Insurance Guidelines.
The regulator also imposed a penalty of Rs 25 lakh on the life insurer considering "the critical gaps in the policy admin system as a serious violation impacting the financial interests of policy holders."
Imposing a penalty of Rs 35 lakh for making certain payments in violation of corporate agents guidelines, IRDA directed the company to discontinue such payments "immediately." "The Life Insurer is also cautioned not to make any such pre-emptive payments hereafter so as to adopt the best business practices," the regulator said.