India's insurance regulator Insurance Regulatory and Development Authority (IRDA) has imposed a fine of Rs6 lakh on SBI Life Insurance for breaching the provisions of the Insurance Act, 1938.
According to IRDA, the company has been penalized for giving higher commissions to intermediaries that include State Bank of India (SBI) and its entities, which did not comply with the reports provided to the Authority.
The company was also charged for selling the two-year Dhanaraksha Plus Limited Premium Paying Term Group product as a single premium product, violating the File and Use (F&U) norms.
IRDA said the insurer received second year’s premium in advance along with first year’s premium, and also did not provide informed choice to the insured, Bimabazaar.com reports.
Commenting on the violations, IRDA said, ”Business practices adopted by life insurer (SBI Life) and the intermediaries involved, severely dent the faith of insuring public."
Regarding premiums, the IRDA said the corporate agents were paid more than the eligible 2% commission.
SBI Life Insurance is a joint venture between State Bank of India and Paribas Cardif, having an authorised and a paid up capital of Rs20bn and RS10bn respectively.