IRDAI vide Order bearing reference number IRDAI/E&C/ORD/MISC/14/01/2025 dated January 24, 2025, issued an Order in the matter of M/s Royal Sundram General Insurance Co. Ltd. (‘Company’) with respect to the Show Cause Notice dated June 25, 2024, issued by the Authority in connection with the remote inspection conducted by the Authority from 14th September 2020 to 25th September 2020.
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 | Violation of Regulation 27 (v) of IRDA (Health Insurance) Regulations, 2016 Reg 27- Settlement/Rejection of claim by insurer: Every Insurance Claim shall be disposed of in accordance to the Terms and Conditions of the policy contract and the extant Regulations governing the settlement of Claims. No Claim shall be closed in the books of the Insurers. | It was observed that during the review of the IBNR calculation sheets for the Financial Year 2019-20, the Company had re-opened approximately 53,354 claims totalling Rs.123.43 crore across Personal Accident, Health, Individual, and Group Schemes, which had previously been closed in the prior or current financial year. Additionally, around 6,466 claims amounting to Rs.34.99 crore were closed during the same period. | The Authority issued a warning and advisory to the Company. |
| 2 | Violation of Regulation-21 of IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017 and 4.1.2. Clause 4(a) of Circular No. IRDA/INSP/CIR/157/09/2018 dated 19th September, 2018. Reg 21- IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017- REPORTING REQUIREMENTS Insurers shall report all the outsourcing arrangements where annual pay-out either per outsourcing service provider or per activity is One Crore rupees or more, every year within 45 days from the close of the financial year. The format for reporting is given in Annexure III. Notwithstanding the above threshold for periodic reporting, the Authority may call for details, cause inspection in respect of any outsourcing arrangements. Clause 4(a)- Data Submission for onsite inspections conducted by Authority under Section having reference number IRDA/INSP/CIR/ONS/157/09/2018 In this context, 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: a. Provide all the necessary data requested prior to the inspection, within the timelines specified in the intimation letter for onsite inspection. | It was observed that the Company did not report payments exceeding Rs.1 crore made to vendors during the 2018-19 and 2019-20 periods in the outsourcing returns submitted to the Authority. Additionally, the Company failed to provide the requested explanations or information to the inspection team during the inspection period. | The Authority levied a penalty of Rs.1 (One) crore for the violation of Regulation-21 of IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017. |
The Authority has directed the Company to:
- Remit the penalty of Rs.1 (One) crore within a period of 45 days from receipt of this Order.
- An intimation for remittance may be sent to Shri T. Venkateswara Rao, General Manager (Enforcement and Compliance Dept.).
- This Order shall place before the Board of Company 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.
- The Company shall provide the Action Taken Report to the Authority on direction given within 90 days from the date of this Order.
- If the Company 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
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