Sector regulator IRDAI (Insurance Regulatory and Development Authority of India) has imposed a fine of Rs 1 crore on India's leading insurance company SBI Life Insurance. This fine has been imposed on this subsidiary of the country's largest bank SBI for not following many rules related to insurance. Not only this, one of the reasons for imposing the fine on the company is also the non-settlement of death claims.
In its investigation, IRDA found that when SBI Life Insurance signed contracts with web aggregators to sell its products, many rules related to the insurance sector were violated. Not only this, the regulator also found that the insurance company refused to pay the insurance claims of many people. This also includes death claims and for this IRDA has also issued an advisory to the company.
The company violated these rules
IRDA's investigation found that when the company signed contracts with insurance sector web aggregators such as Policy Bazaar, MIC Insurance, Compare Policy, Easy Policy and Wishfin, responsibilities such as premium reminder and policy service assistant were handed over to these aggregators. But the details of these services were not mentioned properly in these agreements.
The insurance company paid Rs 1.93 crore for these services but did not disclose the details. The people whom the company made the vendor for this work (a special case of payment to Extant Marketing and Technologies Private Limited) did not have the infrastructure for this and they also outsourced this work and about 95 percent of the revenue was transferred to the third party.
Advisory for settling death claims
Apart from this, IRDAI has advised SBI Life Insurance to strictly follow the provisions of section 45 of the Insurance Act-1938. IRDAI found that SBI Life Insurance rejected about 21 insurance claims. The reason given for this was that the person died within 3 years of taking the insurance, while the information about it was given after the completion of 3 years. On this, IRDAI said that the company could not provide sufficient evidence in support of this. In 17 other cases also, the company rejected the death claim because the date of death was within 3 years of taking the policy. On this, IRDAI has asked the company to follow section 45.
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