Insurance Regulatory and Development Authority (IRDA) of India has ordered SBI Life Insurance Company to refund nearly INR2.75bn ($45m) to policy holders.
SBI Life Insurance, a joint venture (JV) between State Bank of India and French company BNP Paribas Cardif, will have to repay the customers’ money within six months, PTI reported.
IRDA has issued an order asking the insurer to refund the collected amount to shareholders account within six months.
The regulator has issued the order following a probe that found SBI Life Insurance guilty for charging the second year premium together with the first year premium on its Dhanaraksha Plus Limited Premium Paying Term (LPPT), a group insurance policy.
It relates to polices, which were issued during 2008-09, 2009-10 and 2010-11 to those customers who availed of home loans from SBI and its associate banks during this period.
IRDA found that 99.99% of the total premium procured under the LPPT product was sourced by Corporate Agents of the Life Insurer belonging to SBI Group, on which it offered 40% commission on first year premium and 7.5% on second year.