New Delhi: Insurance sector regulator IRDA today imposed a penalty of Rs 12 lakh on Sahara Life Insurance Company promoted by Subrata Roy-led Sahara Group for violation of various regulations, including delay in death claim settlement.
"Accordingly, in exercise of the powers conferred upon me under the provisions of the Insurance Act, 1938, I hereby direct the insurer to remit the penalty of Rs 12 lakh," IRDA Chairman J Hari Narayan said in an order against insurer.
The company, set up in 2004, has been directed to pay the fine within a period of 15 days from the date of receipt of the order, it said.
The Insurance Regulatory and Development Authority (IRDA) observed that the insurer allowed unlicensed entities to solicit business through dummy codes and paid commission to such entities.
"Taking into account, the seriousness of the violation a penalty of Rs 5 lakh is imposed on the insurer under Section 102(b) of the Insurance Act, 1938," IRDA said in the order.
Besides, Sahara Group promoted life insurance company also allowed ineligible person to act as specified person, the order observed.
The insurance regulator also found Sahara Life guilty of licensing ineligible entities as corporate agent.
In its order the regulator said, "it is observed that the corporate agent D K Associates has solicited business through unlicensed persons as evident from the six sample proposal forms obtained during the course of inspection."
The submission of the Sahara Life in this case was taken into account but not considered satisfactory and the violation of corporate agency guidelines of 2005 was proved, it said.
Taking into account the seriousness of the violation, it said a penalty of Rs 5 lakh was imposed on the insurer for the said violation.
The regulator also found the life insurer guilty on count of delay in death claim payments and settling the delayed claims without penal interest.
The insurer's submission that they made special efforts to review pending claims and paid penal interest in all delayed cases was considered. It was also noticed that 41 of the 220 outstanding claims were pending beyond six months, the order said.
"Insurer's submission that claim forms have not been received in 11 of the 41 cases has been also considered.
However, the fact that 30 claims still remain pending beyond six months is established," it said.
"This is a persistent non compliance and hence a serious view is being taken of violation of provision of regulation of Protection of Policyholders' Interests Regulations, 2002. The Authority hereby imposes a penalty of Rs 2 lakh for this violation," it added.