IRDAI vide Order bearing reference number: IRDAl/E&C/ORD/MISC/102/07/2024 dated July 15, 2024, issued an Order in the matter of M/s. Aegon Life Insurance Company Ltd., now known as Bandhan Life Insurance Ltd. (“ Insurer”) with respect to the Show Cause Notice dated February 22, 2024, issued by the Authority for the violation of the provisions of Master Circular on Anti Money Laundering/Counter- Financing of Terrorism, 2015 (“AML Master Circular”), IRDAI (Protection of Policyholder’s Interests) Regulations, 2017 and IRDA (Insurance Web Aggregator’s) Regulation, 2017.
The observation/ issues raised by the Authority and decisions on these observations are summarized hereunder for reference:
Charge No
Violation
Observations of the Authority
Decision of the Authority
1
Violation of clause 3.4 and clause 3.1.13(i)(b) of AML Master Circular.
Clause 3.4 – Internal Control/Audit: –
“”Life Insurers internal audit/inspection departments should verify on a regular basis, compliance with policies, procedures and controls relating to money laundering activities. The reports should specifically comment on the robustness of the internal policies and processes in this regard and make constructive suggestions where necessary, to strengthen the policy and implementation aspects.”
Clause 3.1.13(i)(b)
Suspicious Transactions Report (STR):
“Life Insurers should report the suspicious transactions within 7 working days on being satisfied that the transaction is suspicious. Such reports shall include attempted transactions, or not made in cash.”
The Authority observed that the Insurer has failed to comply with the AML/CFT Guidelines by not carrying out internal audit towards AML
The Authority exercised the power vested under Section 102(b) of the Insurance Act, 1938 levied a penalty of Rs. 1 Crore for the Violation of clause 3.4 and clause 3.1.13 (i) (b) of AML Master Circular.
2
Violation of Regulation 17(2) of and Regulation 5 of the IRDAI (Protection of Policyholder’s Interests) Regulations, 2017.
Regulation 17(2):
Grievance Redressal Procedure-
“The Grievance Redressal Procedure as outlined in Annexure – I shall be followed scrupulously by all Insurers.”
Regulation 5:
“Board Approved Policy for Protection of Interests of Policyholders-
1. Every insurer shall have in place a board approved policy for protection of policyholders’ interests which shall at the minimum, include:
- steps to be taken for enhancing Insurance Awareness so as to educate prospects and policyholders about insurance products, benefits and their rights and responsibilities.
- (service parameters including turnaround times for various services rendered.
- procedure for expeditious resolution of complaints
- steps to be taken to prevent mis-selling and unfair business practices at point of sale and service.
- steps to be taken to ensure that during policy solicitation and sale stages, the prospects are fully informed and made aware of the benefits of the product being sold vis-a-vis the product features attached thereto and the terms and conditions of the product so that the benefits / returns of the product are not mis-stated / mis-represented.
2. Every insurer shall display the service parameters and turnaround times as approved by the Board in its website and keep the same updated as and when the service parameters are revised by the Board.”
The Authority observed that the sample resolution letters sent by the Insurer did not contain the details of the Ombudsmen and their competent Jurisdiction.
The Authority directed the Insurer to take necessary corrective action and file a certificate signed by MD and CEO and CCO confirming the due adherence of Regulations and Guidelines on Protection of Policyholders, systems and processes to the extant instructions in this regard. The Certificate shall be submitted within 21 days from the date of this Order.
Violation of clause 10(ii) and 10(iii), Form T of Schedule VI, Regulation 29 of IRDA (Insurance Web Aggregator’s) Regulations, 2017
“Regulation 29. Sale of Insurance by tele-marketing mode and other distance marketing activities of an Insurance Web Aggregator – Insurance Web Aggregator can use the Telemarketing / Distance Marketing modes, as per the instructions outlined in Form T (Sale of insurance products by tele-marketing mode and other distance marketing activities of Insurance Web Aggregator) of Schedule VI of these Regulations, for solicitation of Insurance based on the leads generated from its designated website.”
“Clause 10(ii) and 10(iii), Schedule VI-
The leads generated from the web-site shall be in specific compliance with the following norms:
(ii) The scripts shall be incorporating all the Key Features of the product and shall be approved by the compliance officers of the respective insurers. The scripts shall be filed with the Authority under Product Approval norms within 15 days by the insurer.
(iii) Every script shall mandatorily mention that the prospect is advised to refer to the detailed prospectus available at the website of the insurer and that the prospectus shall be sent to his email id wherever available.”
The Authority observed that the Standardized Scripts was not approved by the Compliance Officer and did not contain mandatory disclosures. Thus, the insurer lacked the level of due diligence and care.
The Authority directed the Insurer to file a certificate duly signed by the MD and CEO and CCO confirming the due adherence of the Standardized Scripts and related disclosures. The certificate shall be submitted within 21 days from the date of this Order.
The Authority has directed the Prowess to:
1. Remit the penalty of Rs. 1,00,00,000/- (Rupees One Crore) within a period of 45 days from receipt of this Order.
2. An intimation for remittance may be sent to Shri T Venkateswara Rao, General Manager (Enforcement & Compliance) at IRDAI.
3. This Order shall place before the Risk Management Committee and the Board of Insurer at its next immediate meeting so that the Board can take note of the violation and take necessary preventive steps to avoid such violations in future.
4. The Insurer shall submit an Action Taken Report to the Authority on direction given within 45 days from date of this Order.
5. If the Insurer feels aggrieved by this Order, an appeal may be preferred to the Securities Appellate Tribunal, Mumbai as per the provisions of Section 110 of the Insurance Act, 1938.
A copy of the Order is attached for your ready reference.
Source category: IRDAI
Attachments
- /2024/414_Final_Order_in_the_matter_of_Aegon_Life_(_now_known_as_Bandhan_Life).pdf
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