IRDAI had conducted a remote inspection of M/s Reliance General Insurance Company Limited (hereafter Insurer) from 27th December, 2021 to 31st December, 2021. The inspection report, inter alia, revealed certain violations of provisions of the Insurance Act, 1938 and Regulations, Guidelines and Circulars issued thereunder.
Charges by IRDAI
The Insurer made pay outs of approximately Rs.5.16 Crores during FY 2018-19 to Glitterbug Technologies Pvt Ltd (GTPL) the parent company of Coverfox Insurance Broking Pvt Ltd (CIBPL). From the invoices furnished by the insurer, it was observed that the services for which GTPL raised invoices had no bearing with the scope of services specified in the Agreement and were paid on account of “Consumer Awareness Programme”. It was also observed that one of the directors in GTPL named Mr Sanjib Jha (DIN 02277191) was holding directorship in CIBPL.
Insurer made arbitrary pay outs to an individual who is agent of Oriental Insurance Company Limited. The payments of approximately Rs.1.14 Cr, Rs.27 Lakhs and Rs.28.67 Lakhs were made by the insurer to the said agent during the financial year 2018-19, 2019-20 and 2020-21 respectively.
Based on the invoices submitted during inspection for the said three financial years, it was found that the invoices were raised predominantly for rendering services by the agent in connection with the customer awareness programme and at times for rendering services relating to organising of events.
It was evident from the advertisement banners and standees that the name of the agent was advertised alongside RGICL, as if the policies of RGICL are sold by the agent being a licensed agent / intermediary / insurance intermediary of RGICL
Insurer made payments of approximately Rs. 2.92 Cr, Rs. 5.33 Cr and Rs. 9.45 Lakhs during financial years 2018-19, 2019-20 and 2020-21 respectively to an unlicensed entity, Suvidhaa Infoserve Pvt Ltd. purportedly for marketing and advertisement services under the terms of the agreement. However, on visiting the web page of SuvidhaaInfoserve (https://www.suvidhaa.com/) under the Services Tab (https://www.suvidhaa.com/services.html), it was observed that Suividhaa Infoserve was rendering services for general insurance and life insurance business. Further, in the website, inside “About Us” link under “Our Company” tab, it was stated that, inter alia, the company was engaged in collection of insurance renewal premium and there was no mention about the activities stated under scope of work in their Agreement with RGICL.
Insurer made payouts of approximately Rs. 2.89 Crores and Rs. 2.36 Crores to corporate agents – Aditya Birla Housing Finance Limited (ABHFL) and Induslnd Bank Limited respectively, which were in the nature of other than corporate agency commission.
Decision by IRDAI
Penalty of Rs. One Crore has been imposed on M/s Reliance General Insurance Company Limited. The penalty amount of Rs. 1 Crore (Rupees One Crore) shall be remitted by debiting the shareholders’ account within a period of forty-five days from the date of receipt of this order.
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