Regulator Irdai has imposed a penalty of Rs 6 lakh on Shriram Life Insurance for "casual" approach towards certain norms, among other violations.
The company was charged that under a product (Shriram Credit Shield), in many instances, the insurer had covered the loan term of less than three years and provided flat cover of Rs 5,000 for the balance period (till completion of three years), Irdai said in an order today.
It said that the submissions by the insurer cannot justify the deviation from original File and Use.
The insurer should note that whenever they realise the demand of a specific feature that is not available in the approved File and Use, they should approach Irdai for revision of the product in order to include the required feature, it said.
"The new feature can only be marketed post approval of the revision. So, the life insurer resorting to such practice again indicates their casual approach towards regulatory prescriptions with regard to File and Use," Irdai said.
Under this charge, Irdai levied a penalty of Rs 5 lakh.
Another charge was that group claims paid date for the financial years 2011-12 and 2012-13 revealed that death claims were settled in favour of Group Master Policyholder. Further, the life insurer had not obtained a confirmation of receipt of claim payment from the beneficiaries.
In this case, a penalty of Rs 1 lakh has been levied.
The regulator said "the penalty of Rs 6 lakh shall be debited to the shareholders' account of the life insurer" and the amount should be remitted to the Irdai within a period of 15 days.
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