Insurance regulator Irdai has imposed a penalty of Rs 5 lakh on Bharti AXA Life Insurance Company for violating Group Insurance Guidelines (GIG).
The Insurance Regulatory and Development Authority of India (Irdai) found that the company had made payments to the group master policyholders in the name of 'market research', 'sales training' and 'display of publicity material'.
"There shall not be any payments as management expenses or documentation expenses or profit commission or bulk discount or payment of any other description to the group organiser or group manager," the regulator said in the order.
The company made such kind of arrangements to channelise extra payouts to the group master policyholders and thereby violated the provisions of the Group Insurance Guidelines, it added.
"The Life Insurer has made considerable payouts under the guise of these agreements. Hence, as per the powers vested on the Authority, a penalty of Rs 5,00,000 is levied on the Life Insurer," it said.
It has also asked the life insurer to ensure compliance of the said guidelines hereinafter.
The regulator has directed the company to pay the penalty of Rs 5 lakh within a period of 15 days from the receipt of the order.
Besides, it was also found that the company kept its main database servers in Singapore SingTel DC, which violated IRDAI's (Maintenance of Insurance Records) regulations.
Policy-wise details of all policy holders are sent to the main server located in Singapore SingTel DC, it said.
The regulator also observed that in case of their channel management system (RCMS Application) and Financial system - RGL, both applications main server and back up servers are at Singapore SingTel DC and Germany DC, respectively, it added.
"...The Authority already has processed the representation made by the Life Insurer and accorded time period up to September 30, 2016, to shift the servers to be in line with the IRDAI (Maintenance of Insurance Records) Regulations," it said.
The Life Insurer is advised to comply with the same under intimation to the Authority, Irdai added.
