'ËĘ ÁflÁŸĸĘ∑§ •ı⁄U Áfl∑§Ę‚ Ž˝ĘÁœ∑§⁄UáĘ - IRDA

in the airirda journal October 2012Decision: As regards conduct of surpriseinspection of Group Organisers thesubmission of the insurer that it hascommenced periodical visits to the GroupOrganizers to verify the process adoptedand the maintenance of the membershipdata is taken into consideration and nocharges are pressed. With regards topayment of claims favouring Master PolicyHolders, the submissions of the insurerthat the cheques are issued in favour ofthe Bank / NBFCs along with the name oflife assured and the loan account numberas part of well established bankingpractice is not in order, as it is in violationof Clause C 7 that envisages the paymentof claims in favour of beneficiaries ofmembers. In light of this, in accordance tothe powers vested under the provisions ofSection 102 of the Act, a penalty of Rs1,00,000 (Rupees One Lac Only) isimposed. Insurer is directed to adhere theprovisions of Clause C 7 and Clause C – 11of Group Insurance Guidelines.11. Charge 11: Necessary provision forfunding of future premiums in case ofdeath claims under ‘Unit linked Child Plus’product, which has in built premiumwaiver is not made and premium is paidby the insurer by debiting ‘benefit paid’account on due date - Violation of IRDARegulations on ‘Asset Liability andSolvency Margin’, ‘Actuarial Report andAbstract’ and ‘Preparation of FinancialStatements and Auditor’s Report ofInsurance Companies’.Decision: The Insurer submits that thenon provision of in-built premium waiverbenefit reserves was an oversight and hasnot materially altered the solvency andthe financials of the company. The Insureralso confirms that necessary provisionsare made in the books of accounts as perpolicy conditions for all the products. Inlight of these submissions, charges arenot pressed and Insurer is directed toensure compliance to all the provisions ofall the referred regulations.12. Charge 12: As at 31.03.2010 morethan 12000 claims were pending out of15922 maturity claims due in 2009-10(Mostly the claims are from groupportfolio). Out of 1863 individual maturityclaims settled in 09-10, 424 were settledbeyond 180 days from the maturity date -Violation of Regulation 8 of IRDA(Protection of Policyholders’ Interests).Decision: In respect of Group Insuranceclaims the Insurer submits that as perMemorandum of Understanding enteredunder the Ladli scheme with Governmentof Delhi, the Government has to notify theeligibility and beneficiaries’ Bank accountdetails to the insurer to enable it to settlethe claims, hence delays. As regards 424maturity claims referred in theobservation, the insurer submits that thedelay is owing to non availability ofdocuments from the beneficiaries. Onexamining submissions made, no chargesare pressed and the Insurer is directed toensure the compliance to all theprovisions of IRDA (Protection ofPolicyholders’ Interests) Regulations,2002.13. Charge 13: Insurer is settling theentire accumulated amount underdeferred annuity policies to thepolicyholder, in lieu of annuity paymentseven after the annuity vesting date oncase to case basis, in effect allowing 100%commutation of annuity against the File &Use. Further, Insurer is also settling lumpsum amount in lieu of annuity paymentswhere the monthly annuity is less than Rs300/-, though as per File & Use minimummonthly annuity could be Rs 250/- -Violation of File and Use and Section 4 ofInsurance Act, 1938.Decision: The submissions of the insurerthat few annuities are commuted in viewof the small amounts of monthly annuitywith higher cost of servicing are taken intoconsideration. The submissions that theneeds of the annuitants (like sickness etc.)are also the basis for lump sum paymentafter commencement of the annuitypayment are also considered. Onexamining the submissions I am of theconsidered opinion that settling lumpsum benefits after commencement of theannuities and settling lump sum benefits,though, the annuity payable is more thanthe minimum annuity agreed at the Fileand Use, is a gross violation of the normsand against the principle of annuitybusiness which shall by all means protectthe continuity of the payment of agreedannuity. However, considering thenumber of cases involved (6 cases in threeyears), the Insurer is reprimanded for theviolations and advised to ensurecompliance to File and Use norms andupheld in high esteem the objectives ofannuity plans.14. Charge 14: The insurer is deductingan amount of Rs 200/- towardsadministration charges in addition toallowable deductions, while settling FreeLook cancellations of Non-linked plans(excluding pension plans) - Violation ofRegulation 6 (2) of IRDA (Protection ofPolicyholders’ Interests) Regulations,2002.Decision: The Insurer submits that Rs 200are the administration charges in additionto stamp duty and medical expenses andno proportionate medical mortalitycharges have been recovered. The Insureralso submitted that it has refunded all therecoveries made on Free LookCancellations. In light of confirmationsubmitted by Insurer on the action taken,no charges are pressed. However, theinsurer is reprimanded for adopting apractice which is not just for allpolicyholders owing to varying mortalitycharges. Insurer is directed to ensurecompliance to Regulation 6 (2) referredabove.15. Charge 15: Undue delay is observedwhile sending cheques pertaining toPartial withdrawal / full surrender payoutsto the clients - Violation of Regulation 1014