Irda fines 10 insurers

The Insurance Regulatory and Development Authority (Irda) has fined 10 insurance companies, including both the insurance arms of the Bajaj Auto Group, Reliance General, United India, Iffco-Tokio, New India Assurance and Shriram Life for non-compliance with various guidelines.

The violations varied from opening branch offices without seeking the regulator's permission to violation of advertisement guidelines and non-fulfilment of social sector obligations.

According to Irda's 2006-07 annual report, between April 2006 and September 2007 a penalty of Rs 5 lakh each was levied on various insurers.

These were Bajaj Allianz Life Insurance for opening offices without seeking prior permission from Irda, United India Insurance for charging lower premium for Pravasiya Bhartiya Bima Yojana, Bajaj Allianz General Insurance for violating Irda's advertisement regulations, Reliance General for violating provisions of Section 102 of the Insurance Act 1938 while Iffco-Tokio General Insurance was fined for engaging a non-licensed entity as an intermediary.

Section 102 of the Insurance Act allows a penalty of Rs 5 lakh in case an insurer does not furnish any document, statement, account, return or report to the Authority, fails to maintain solvency margin, fails to comply with Irda's directions including directions on insurance treaties. However, Irda did not specify which of the violations Reliance General did commit.

Additionally, three insurers "" Star Health and Allied Insurance (Rs 5,000), Agriculture Insurance Corporation (Rs 5.55 lakh) and Reliance General (Rs 1.62 lakh) "" were fined for late submission of registration renewal application.

Insurance companies have to cover a fixed number of lives in a said area depending on their year of operations specified by Irda as their social sector obligations. New India Assurance and Shriram Life faced a penalty of Rs 5 lakh each as they were non-compliant towards their social sector obligations.

Shriram Life Insurance Company has so far provided cover to 5,952 people since its operations began in 2006. It was supposed to cover 7500 lives. As the shortfall was observed for the second year in succession, Irda imposed a penalty.