The Insurance Regulatory and Development Authority (Irda) has imposed a monetary penalty of INR17.7m ($294,166) against Reliance Life Insurance for violating various insurance regulations in the country.
During the course of investigation, the Indian insurance watchdog scutinized 47 charges leveled against the life insurance company, which includes violation of advertisement and product distribution norms, as reported by PTI.
The market regulator slammed the insurance for indulge in the business sourced from unlicensed entities through multi level marketing for which the company will have to reimburse a fine of INR6.5m ($108,027).
Additionally, the insurer was fined INR2.5m ($41,549) for service agreements with various entities, which IRDA claimed were also engaged for providing services of lead generation and dissemination of information.
The market regulator said that such agreements with various third parties have violated the Insurance Advertisement Regulations, 2000.
Apart from this, IRDA fined INR2.5m ($41,549) on the insurer for the procedure adopted in issuing cheques favoring the Master Policy Holder which breached its group insurance guidelines.
"Further, payment of significant monies for an unskilled job of distribution of publicity material under the guise of ‘Dissemination of Information’ is questionable," said Irda in the order. Reliance Life has been directed to immediately discontinue the payments.
"…the penalty of Rs1.77 crore shall be remitted by the Life insurer by debiting shareholders’ account within a period of 15 days from the date of issuance of this order…," Irda said in its order.