The Insurance Regulatory & Development Authority (Irda ) has slapped a fine of Rs 10 lakh on Reliance Life Insurance Company for violating some of the norms laid down by the regulating authority.
A showcause notice was issued to Reliance Life for having paid excess referral fees than envisaged in the referral guidelines. In its reply, the company has agreed for this lapse and informs that the fees was paid in anticipation of business volumes to be generated as per initial commitments. This is in violation of the laid down provisions of the guidelines, according to Irda.
Irda also observed that the company opened many offices without taking the necessary approvals.
Irda noted that Reliance Life Insurance Company has contracted business in a unit with an identifiable code number relating to a branch, for which no approval of Irda has been accorded. Their contention that such booking of business was only for the purposes of MIS for internal monitoring is not acceptable, Irda noted. If the intention was to establish whether opening of a branch office would be viable at a given location, such an assessment could have been done by other means. There are several examples where branches occupy the same building and quite often the same floor of a building, observes Irda.
It is also noted by the Irda inspection team that the Reliance Life Insurance Company has outsourced key jobs related to issue of licences and thus violated the laid down procedures. Reliance Life Insurance Company informs that co-sourcing of licensing process was a legacy of AMP Sanmar Life Insurance Company in the past.
In its reply, the company informs they had stopped the outsourcing process after it had transitioned the entire process to Mumbai and they had not outsourced any of the activities related to licencing. However, the insurer is cautioned not to outsource any of the activities involved in issue and renewal of licenses in future, Irda said.
Irda also saw deviations in the F & U procedure particularly in group products in violation of certain circulars.
