Page 20 - Insurance Times April 2019

Charge No. Brief Title of Charges and the provisions violated Decision of the Authority
1. Charge : Entered agreements with Group Master Policy Penalty of Rs. 5,00,000 and direction to
holders and making payouts in Violation of clause B-2 comply with all the relevant regulatory
and clause C-4 of Group Insurance Guidelines provisions issued in this regard.
No. 015/IRDA/Life/ Circular/ GI/Guidelines/2005
dated 14/07/2005
2. Charge: i) Gift Card, foreign trips arranged to employee i) Penalty of Rs. 5,00,000
of Corporate Agents through Various Sales campaign
ii) Entered service level agreements with Corporate
Agents and made payouts.
Violation of Clause 21 of Guidelines on Licensing of ii) Penalty of Rs. 5,00,000
Corporate Agents No.017/IRDA/Circular/GI
Guidelines/2005 dated 14/07/2005
3. Charge: Contests floated for employees of the brokers Penalty of Rs. 5,00,000
and remunerated them with gifts, foreign trips.
Violation of Regulation 19 of IRDAI (Insurance Brokers)
regulations 2002

Behind this change is a fundamental shift in how insurance in question on any ground after three years. Consumer
companies differentiate themselves in today's consumer- interest will be better served through provisions like those
driven marketplace. Insurers have traditionally competed on enabling penalties on intermediaries/insurance companies
product features, where the uniqueness of a given product for misconduct. It also disallows multi-level marketing of
alone set it apart from the competition. In today's market, insurance products in order to curtail the practice of mis-
however, an excessive feature set can be a detriment. selling.

Consumers expect to be able to quickly understand the The amendments provide for an easier process for payment
products and features available to them and, once they to the nominee of the policy holder, as the insurer would
make a choice, then initiate and complete an insurance be discharged of its legal liabilities once the payment is
purchase in a matter of minutes, especially when interacting made to the nominee. It is now obligatory in the law for
in an online or mobile environment. To offer that kind of insurance companies to underwrite third party motor
experience, insurers need products in their portfolios that vehicle insurance as per IRDAI regulations.
are both intuitive, so consumers can quickly understand
them at the point of sale, and simple, so as to enable an Rural and social sector obligations for insurers are retained
automated underwriting and issuance process. in the amended laws. Insurance sector regulator, IRDAI has
been empowered to regulate key aspects of insurance
Penalty for Mis-selling: company operations in areas like solvency, investments,

The amended insurance law provides for a penalty of up to expenses and commissions.
Rs 25 crore for mis-selling or misrepresentation of policies
by agents or insurance companies to customers. The Now, IRDAI has been empowered to appoint one or more
Insurance Laws (Amendment) Bill, 2015 has several of its officers as 'investigating officers' for inspection of the
provisions for levying higher penalties ranging from up to affairs of an insurance agent and to inspect his books,
Rs 1 crore to Rs 25 crore for various violations including mis- records and documents. The insurers would be responsible
selling and misrepresentation by agents/ insurance for all acts and omissions by its agents, including violations
companies. of the code of conduct specified under these guidelines. In
such cases, they would be liable to a penalty of up to Rs 1
With a "view to serving the interest of the policy holders crore (Rs 10 million). According to the norms, no individual
better", the period during which a policy can be repudiated can act as an agent for more than one life insurer, one
on any ground will be confined to three years from the general insurer, one health insurer and one of each type of
commencement of the policy and no policy would be called monoline insurers.

20 The Insurance Times, April 2019