Order in the matter of Reliance Nippon Life Insurance Co. Ltd.

The Insurance Regulatory and Development Authority of India (“ IRDAI / Authority ”) issued an order in the matter of M/s Reliance Nippon Life Insurance Company Limited (hereinafter referred to as the “ Insurer/Company ”) vide order bearing reference number IRDAI/E&C/ORD/MISC/133/11/2025 dated November 25, 2025 (“ Order ”), with respect to the remote inspection conducted by the Authority dated January 10, 2022 to January 13, 2022. The Show Cause Notice (“ SCN ”) was issued by the Authority dated November 26, 2024 and the reply of the Insurer to the SCN was vide email dated December 24, 2024 and further submission post hearing was made by the Insurer vide email dated February 24, 2025.

The observations raised by the Authority and decisions thereon are summarised below for your reference:

• Charge
• Violation
• Observation of the Authority
• Decision of the Authority

1. Violation of:

Clause 6 and 7.1 of Corporate Governance Guidelines issued vide Circular Number IRDA/F&A/GDL/CG/100/2016 dated 18th May 2016 (“ Guidelines ”).

The relevant excerpt of Clause 6 of the Guideline reads as follows:

Control Functions

Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• appropriate internal controls to ensure that the risk management and compliance policies are observed;

appropriate internal controls to ensure that the risk management and compliance policies are observed;

• an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

• Independence of the control functions, including the risk management function, from business operations demonstrated by a credible reporting arrangement .’

Independence of the control functions, including the risk management function, from business operations demonstrated by a credible reporting arrangement .’

The relevant excerpt of Clause 7.1 of the Guidelines is mentioned as follows:

Audit Committee (mandatory)

• The Chairperson of the Audit Committee should be an Independent Director of the Board with an accounting/finance/audit experience and may be a Chartered Accountant or a person with a strong financial analysis background. The association of the CEO in the Audit Committee should be limited to occasions where the Audit Committee requires eliciting any specific information concerning audit findings. As required under Section 177 of the Companies Act, 2013, the Audit Committee shall comprise of a minimum of three directors, majority of whom shall be Independent Directors.

The Chairperson of the Audit Committee should be an Independent Director of the Board with an accounting/finance/audit experience and may be a Chartered Accountant or a person with a strong financial analysis background. The association of the CEO in the Audit Committee should be limited to occasions where the Audit Committee requires eliciting any specific information concerning audit findings. As required under Section 177 of the Companies Act, 2013, the Audit Committee shall comprise of a minimum of three directors, majority of whom shall be Independent Directors.

• The Audit Committee shall be directly responsible for the recommendation of the appointment, remuneration, performance and oversight of the work of the auditors (internal/statutory/Concurrent). In case of statutory audit, the independence of the external auditors shall be ensured (although the approval of appointment, remuneration and removal of the statutory auditors shall be done by the shareholders at the general body meeting).

The Audit Committee shall be directly responsible for the recommendation of the appointment, remuneration, performance and oversight of the work of the auditors (internal/statutory/Concurrent). In case of statutory audit, the independence of the external auditors shall be ensured (although the approval of appointment, remuneration and removal of the statutory auditors shall be done by the shareholders at the general body meeting).

The Authority observed that:

• The remuneration paid to the Joint Statutory Auditor was neither recommended nor approved by the Audit Committee or the Board.

The remuneration paid to the Joint Statutory Auditor was neither recommended nor approved by the Audit Committee or the Board.

• Moreover, the Board and the Audit Committee delegated the responsibility of determining the Statutory Auditors’ remuneration to the Executive Director and Chief Executive Officer and the Chief Financial Officer.

Moreover, the Board and the Audit Committee delegated the responsibility of determining the Statutory Auditors’ remuneration to the Executive Director and Chief Executive Officer and the Chief Financial Officer.

• Since statutory auditors are expected to offer independent oversight of the financial statements of the Insurer, having the Executive management determining the pay of statutory auditors could undermine their independence and may give rise to a potential conflict of interest.

Since statutory auditors are expected to offer independent oversight of the financial statements of the Insurer, having the Executive management determining the pay of statutory auditors could undermine their independence and may give rise to a potential conflict of interest.

Warning and Advisory

The Authority warned the Insurer for the lapse and advised to ensure compliance with Clause 2.5 and 4.1 of Master Circular on Corporate Governance for Insurers, 2024 issued vide Circular No. IRDAI / F&I / CIR / MISC / 82 / 5 / 2024 dated May 22, 2024 (“ Master Circular on Corporate Governance ”). Further, stringent action shall be taken in case of repetition of similar lapse.

2. Violation of:

a) Clause 7.4 of the Guidelines.

The relevant excerpt of Clause 7.4 of the Guideline is mentioned as follows:

With a view to addressing the various compliance issues relating to protection of the interests of policyholders, as also relating to keeping the policyholders well informed of and educated about insurance products and complaint-handling procedures, each insurer shall set up a Policyholder Protection Committee.

The Committee should put in place systems to ensure that policyholders have access to redressal mechanisms and shall establish policies and procedures, for the creation of a dedicated unit to deal with customer complaints and resolve disputes expeditiously. The functions and responsibilities of the Policyholders’ Protection Committee shall include:

• Reviewing Repudiated claims with analysis of reasons.

Reviewing Repudiated claims with analysis of reasons.

• Status of settlement of other customer benefit payouts like Surrenders, Loan, Partial withdrawal requests etc.

Status of settlement of other customer benefit payouts like Surrenders, Loan, Partial withdrawal requests etc.

• Review of unclaimed amounts of Policyholders, as required under the Circulars and guidelines issued by the Authority.

Review of unclaimed amounts of Policyholders, as required under the Circulars and guidelines issued by the Authority.

The Board shall review the status report on policyholders’ protection issues, submitted by the Committee, in each of its meeting.’

b) Clause 4(c) of circular No. IRDA / INSP / CIR / ONS / 157 / 09 / 2018 dated 19th September 2018 (“ Circular ”).

The relevant excerpt of Clause 4(c) of the Circular is mentioned as follows:

it is brought to the notice of all the entities that the delays in submission of data beyond the specified time limits or non-submission of requisite data defeat the purpose of onsite inspections conducted by the Authority and is a serious cause of concern. In this regard, it is advised that every inspected entity shall:

c. Exercise care to ensure that the data is accurate and complete in all respects and reflect true state of affairs.’

The Authority observed that:

• The Policyholders Protection Committee (“ PPC ”) failed to review certain matters required under the Guidelines. Specifically, the PPC did not review repudiated claims along with their reasons.

The Policyholders Protection Committee (“ PPC ”) failed to review certain matters required under the Guidelines. Specifically, the PPC did not review repudiated claims along with their reasons.

• Further, the Insurer has not put up to the PPC, the reasons for such high surrenders unpayable and the steps taken or proposed to be taken by them to reduce the unclaimed amounts.

Further, the Insurer has not put up to the PPC, the reasons for such high surrenders unpayable and the steps taken or proposed to be taken by them to reduce the unclaimed amounts.

• Furthermore, while sharing the Board meeting agenda notes on January 13, 2022, the Insurer appended an additional page after the conclusion of the agenda and the “thanks message” note, containing details of claim repudiations.

Furthermore, while sharing the Board meeting agenda notes on January 13, 2022, the Insurer appended an additional page after the conclusion of the agenda and the “thanks message” note, containing details of claim repudiations.

• The above mentioned page had not appeared in the agenda notes previously shared by the Insurer, raising concerns that it may have been inserted only after the inspection query.

The above mentioned page had not appeared in the agenda notes previously shared by the Insurer, raising concerns that it may have been inserted only after the inspection query.

• It was observed that the Insurer made selective submission of minutes of PPC Committee that constitutes non-compliance with regulatory instructions and demonstrates a lack of adherence to comprehensive disclosure requirements.

It was observed that the Insurer made selective submission of minutes of PPC Committee that constitutes non-compliance with regulatory instructions and demonstrates a lack of adherence to comprehensive disclosure requirements.

• Further, the minutes for Item No. 9 show that the “Statistics of Claims and Reasons for Repudiation” for March 2023 were only placed before the Committee for noting, rather than for review constituting non-compliance with Clause 7.4 of the Guidelines. The approach of the Insurer indicated a procedural lapse in meeting mandated governance oversight responsibilities.

Further, the minutes for Item No. 9 show that the “Statistics of Claims and Reasons for Repudiation” for March 2023 were only placed before the Committee for noting, rather than for review constituting non-compliance with Clause 7.4 of the Guidelines. The approach of the Insurer indicated a procedural lapse in meeting mandated governance oversight responsibilities.

Warning and Advisory

The Insurer was warned against the failure to review the PPHI matters including repudiated claims, high surrenders and was advised to ensure compliance with Clause 4.4 of Master Circular on Corporate Governance. Any recurrence of similar lapse shall be viewed sternly and stringent regulatory action, as deemed appropriate, shall be taken by the Authority.

The Authority also advised the Insurer, to ensure the following:

• Review the SOP with emphasis on the triggers for auto-surrender and foreclosure, ensuring compliance with the applicable regulations to maintain fairness and equity for policyholders.

Review the SOP with emphasis on the triggers for auto-surrender and foreclosure, ensuring compliance with the applicable regulations to maintain fairness and equity for policyholders.

• Conduct a review of cause-wise analysis of claim repudiations and strengthen underwriting practices to minimise or avoid potential repudiations due to non-disclosure of pre-existing illness through appropriate root cause analysis.

Conduct a review of cause-wise analysis of claim repudiations and strengthen underwriting practices to minimise or avoid potential repudiations due to non-disclosure of pre-existing illness through appropriate root cause analysis.

• Establish robust systems and processes to minimise unclaimed amounts, in compliance with the applicable Regulations and instructions.

Establish robust systems and processes to minimise unclaimed amounts, in compliance with the applicable Regulations and instructions.

The Authority also directed the Insurer to:

• Place the Order before the Board of Insurer in the upcoming Board Meeting and to provide a copy of the minutes of the discussion.

Place the Order before the Board of Insurer in the upcoming Board Meeting and to provide a copy of the minutes of the discussion.

• Submit an Action Taken Report to the Authority on direction given within 90 days from the date of Order.

Submit an Action Taken Report to the Authority on direction given within 90 days from the date of Order.

The Insurer, if aggrieved by the Order, may prefer an appeal to the Securities Appellate Tribunal as per Section 110 of the Insurance Act, 1938.

A copy of the Order is attached for your ready reference.

Source category: IRDAI

Attachments

• Order in the matter of Reliance Nippon Life Insurance Co Ltd