The Insurance Regulatory and Development Authority of India has imposed a fine of Rs 4 lakh on SBI Life Insurance Company Ltd. for violating norms on advertisement and protection of policyholders' interest.
IRDAI said it had examined samples of proposal forms signed on Nov. 30, 2016, Dec. 23, 2016, Feb. 17, 2017, and March 23, 2017.
It was found that provisions prior to the Insurance Laws (Amendment) Act, 2015, were incorporated instead of new provisions. Besides, the provisions of the Section 45 of Insurance Act, 1938, which deals with advertisement and disclosure norms were not properly reflected, the insurance regulator said.
IRDAI said the dates on which the samples were examined almost two years after the promulgation of Insurance Laws (Amendment) Act, 2015, which indicated a casual approach of the life insurer in adhering to the regulatory norms.
"A proposal form is a basis of the contract and the provisions of the referred sections of Insurance Act, 1938, should be clearly and correctly mentioned. The lapses on the part of the life insurer not only violate the provisions of regulations but also indicate lack of proper internal controls in usage of applications for insurance, which may jeopardize the interests of the prospects/insureds," IRDAI said in its order.
Hence, the authority as per the powers vested in it under Section 102(b) of the Insurance Act, 1938, a penalty of Rs 4 lakh (Rs 1 lakh for lapse noticed in each of the four proposal forms) is imposed on the life insurer," it said. It also directed the life insurer to ensure non-recurrence of such lapses.
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