The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a fine of Rs 1 crore on SBI Life Insurance. This fine has been imposed on the company for violating the rules related to insurance web aggregators and outsourcing. Along with this, IRDAI has also warned the company for wrongly rejecting many insurance claims.
Why was SBI Life Insurance fined?
IRDAI’s investigation found that SBI Life worked with several web aggregators such as Policybazaar, MIC Insurance, Compare Policy, Easypolicy and Wishfin, but did not provide clear information about these services and their payments. The company paid Rs 1.93 crore to Extent Marketing and Technologies Pvt. Ltd. in 2017-18 and 2018-19, but the details were not given to IRDAI.
Apart from this, IRDAI also found that SBI Life violated the rules of outsourcing and paid unnecessarily high fees to web aggregators. IRDAI has directed the company to improve its outsourcing rules and implement them as per the rules.
IRDAI warns on rejection of insurance claims
IRDAI asked SBI Life to strictly follow “Section 45 of the Insurance Act 1938” in settling life insurance claims. IRDAI’s investigation revealed that SBI Life had rejected 21 insurance claims in which either information was concealed or death occurred within three years of policy issuance. But IRDAI found that SBI Life did not have sufficient evidence to reject these claims.
SBI Life said in many cases that the death occurred within three years, but IRDAI found that the company settled 86 claims, involving Rs 10.21 crore (claim amount of Rs 5.78 crore and penalty of Rs 4.43 crore). IRDAI has directed SBI Life to settle all claims in future as per the law.
IRDAI warns against irregularities in sale of insurance products
IRDAI has also warned SBI Life for not following the rules in the sale of insurance products. It was found that the company continued to sell some products even after their last date. IRDAI found that many times the company also sold those insurance products whose launch date had not even arrived.
This move by IRDAI is important towards protecting the interests of policyholders and making insurance companies follow the rules. This case also shows that insurance companies should give clear and transparent reasons behind rejecting claims.
