LIC's claim settlement better than pvt insurers: Irda
LIC posted claim settlement ratio of 97.73 per cent last fiscal, as compared to 97.42 per cent in 2011-12.
Private insurance companies fared poorly in terms of settlement of death claims in 2012-13 as compared to state-owned LIC (Life Insurance Corporation), says sectoral regulator Irda. "The claim settlement ratio of LIC was better than that of the private life insurers," Insurance Regulatory and Development Authority said in its annual report.
Life Insurance Corporation posted claim settlement ratio of 97.73 per cent last fiscal, as compared to 97.42 per cent in 2011-12.
For private insurers, the settlement ratio had gone down to 88.65 per cent in 2012-13, as compared to 89.34 per cent during the previous year, Irda said.It further revealed that private sector insurance firms have been rejecting about 8 per cent of the claims as against 1.12 per cent by the LIC.
According to Irda, there were 3.47 per cent claims sought from private insurance companies were pending at the end of the year. The similar figure for LIC was 1.04 per cent.There are about two dozen private life insurance firms in India and the larger ones include ICICI Prudential Life, HDFC Standard Life and Reliance Life.
The life insurance industry recorded a premium income of over Rs 2.87 lakh crore during 2012-13, up 0.05 per cent over the previous fiscal.
While private sector insurers posted 6.87 per cent decline in premium income, LIC recorded 2.92 per cent growth in 2012-13 compared to the previous fiscal.
Insurance regulator Irda today imposed a fine of Rs 1.77 crore on Reliance Life Insurance for violation of various norms including obtaining business from unlicensed entities. "...the penalty of Rs 1.77 crore shall be remitted by the Life insurer by debiting shareholders’ account within a period of 15 days from the date of issuance of this order...," Irda said in an order.
It is observed that the Life Insurer has failed to monitor the activities of the corporate agent, it said, adding that this is considered as a serious lapse and the insurer is warned for the same. Insurance Regulatory and Development Authority (Irda) examined 47 charges leveled against the company including violation of advertisement and product distribution norms. Instances are noticed where the business is sourced from unlicensed entities through Multi Level Marketing and was logged into the code of licensed entities, it said. Business was procured by forged signatures or without signatures at the space specified in the agents confidential report column, it added. Of the total charges, maximum penalty of Rs 65 lakh was imposed for soliciting insurance business from unlicensed entities. Irda said the business sourced through unlicensed entities was logged in various code numbers of Reliance Third Party Distribution Channel, which is one of the new business verticals of the insurer. "Hence, under powers vested in Section 102(b) of the Act, a penalty of Rs 60 lakh is levied on the life insurer," it said. The regulator also slapped a fine of Rs 50 lakh for violation of marketing and publicity norms. There was issue with regard to payments to referral entities under contests. "It is observed that the insurer has made these payments to referral entities under contests in violation of provisions of Circular Ref. Irda/Cir/004/2003 dated 14/02/2003 and therefore a penalty of Rs 5 lakh is hereby imposed under Section 102(b) of Insurance Act, 1938," it said.
Recently, Irda asked SBI Life Insurance company to refund Rs 275.29 crore to the policy holders as the amount was collected from them in violation of norms.