IRDAI issued an Oder bearing reference number: IRDAI/E&C/ORD/ONS/1/2024 dated January 3, 2024, in the matter of M/s. Reliance General Insurance Company Ltd. (“Insurer”) with respect to the on-site inspection conducted from August 23, 2018, to August 31, 2018.
The observations/ 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
Regulation 3(1)(b) of IRDA (Corporate Agents) Regulations, 2015
Corporate Agent solicited insurance policies having sum insured exceeding Rs. 5 Crores per risk for all insurances combined
M/s. UCO Bank Ltd , a corporate agent, solicited 264 general insurance policies of the insurer where the sum insured exceeded Rs. 5 crores.
Insurer has been cautioned for such violation.
2
Clause 15(5)(d) of the Guidelines on MISP dated August 31, 2017
MISP or any of its associate company, shall not receive directly or indirectly from the insurer and the insurer shall not pay directly or indirectly to the MISP or any of its associate company any fees, charges, infrastructure, advertising expenses, documentation charges, legal fees or any other payment by whatever name called except as specified in the said Guidelines
Insurer continued the service agreement with M/s. Advaith Motors Private Limited, an MISP, sponsored by an Insurance broker and one of the Corporate agents of the Insurer. The service agreement was renewed in 2018, for providing the following services:
1. Printing and publishing of posters etc.
2. Advertisement
3. Documentation, scanning and storage of data
4. Creating awareness and interest
Insurer had paid Advaith Motors, Rs. 76,21,292/- during the period November 23, 2017 and in July 16, 2020 for providing these services.
The Authority has imposed a penalty Rs. 1 crore and instructed the insurer to adhere to MISP Guidelines.
3
Violation of Regulation 3(1)(a) and 12 IRDAI (General Insurance – Reinsurance) Regulations, 2016
Insurer is required to maximise the retention within the country and shall adhere to the stipulations provided for order of Preference for cessions by Indian Insurers.
Insurer has not provided sufficient opportunities to General Insurance Corporation (GIC) in order to comply with order of preference.
Based on the submissions of the insurer, no charge is pressed.
4
Violation of Regulation No. 12(1) & (2) of IRDAl (Insurance Surveyors and Loss Assessors) Regulations, 2015
Licensed Surveyor and Loss Assessor has to be employed to assess the losses above Rs. 50,000/- in case of Motor Insurance Claims.
In 558 claims in 2016-17 and 467 claims in 2017-18, insurer appointed in-house employees, who did not possess surveyor license, to assess losses exceeding Rs 50,000/- under Motor Insurance.
Insurer’s submission that assessed and paid claim is below regulatory limits for licensed surveyors is without merit, as the limits indicated in the Regulations is on estimated loss and not on assessed loss. Since, the violation continued for a period of more than two FYs, the Authority imposed a penalty of Rs. 1 crore for the said violation and Insurer is directed to depute only licensed surveyors for survey of motor claims as stipulated in the Regulations.
The Authority has directed the Insurer to:
1. Remit the penalty of Rs. 2,00,00,000/- (Rupees Two Crore only) within a period of 45 days from receipt of this Order.
2. Place the order before the Board of the Insurer in the upcoming Board Meeting and provide a copy of the minutes of the discussion.
3. Submit an Action Taken Report to the Authority on the direction given within 90 days from the date of the Order.
4. If the Insurer feels aggrieved by this Order, an appeal may be preferred to the Securities Appellate Tribunal as per the provisions of Section 110 of the Act.
A copy of the order is attached for your ready reference.
Source category: IRDAI
Attachments
- /2024/334_IRDAI_Order_in_the_matter_of_Reliance_General_Insurance_Company_Limited_.pdf
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