SBI Life told to distribute excess payments to policyholders

New Delhi: Insurance sector regulator IRDA has directed SBI Life Insurance Company to distribute the "wrongful" component of administrative charges it paid as reimbursement of group expenses to commission agents to the members or beneficiaries of the concerned policies.

As per the guidelines, life insurers are not allowed to pay towards management expenses, documentation expenses, profit commission, bulk discount or any other payment to the agent, corporate agent, group organiser or group manager.

SBI Life Insurance had made certain payments towards reimbursement of group administrative expenses to various master policy holders, which were in "violation" of IRDA guidelines and for which it was imposed a penalty of Rs 70 lakh in July, 2011.

"For this purpose (distribution), recalculate the premium chargeable for each member of each Group Insurance Scheme of the Life insurer without taking into consideration 20 per cent of premium that is paid to Master Policy Holders," Insurance Regulatory Authority of India (IRDA) said in its directive.

"Distribute the wrongful administrative charge amongst the respective members/beneficiaries of each Master Policy by way of refund...," it added.

The schemes in question included 'Super Suraksha' policies on home, car and tractor loans.

The regulator said these payments to master policyholders were not in the interest of the general policyholders.

IRDA directed SBI Life to identify the member or beneficiaries for each master policy, against which reimbursement were made towards administrative expenses as a

percentage of premium.

IRDA said the directives should be immediately initiated and be completed within six months.

SBI Life Insurance is a joint venture between State Bank of India and France's BNP Paribas Cardif. SBI owns 74 per cent of the total capital, while the French insurer owns the rest.

Insurance cos get tax evasion summons

New Delhi: The finance ministry has issued summons to about a dozen insurance firms seeking documents pertaining to sale of insurance policies and commission paid to their field associates as part of its probe into alleged service tax evasion of over Rs 300 crore.

Official sources said that firms, including Birla Sun Life Insurance, ICICI Prudential, HDFC Life Insurance, MetLife Insurance and Reliance Life Insurance Company among others have been issued summons by Directorate General of Central Excise Intelligence (DGCEI), an intelligence arm under the finance ministry.

An email query seeking response from HDFC Life Insurance, MetLife Insurance, Birla Sun Life and ICICI Prudential was not answered. However, a Reliance Life Insurance Company (RLIC) spokesperson confirmed receiving a letter from the department seeking information.

“We have received a letter from the DGCEI seeking some information. We understand that this is part of a process wherein the department has sought similar information from several other insurance companies.

“RLIC is in full compliance with applicable laws and regulations and will be providing the required information as desired,” the spokesperson said.

Preliminary probe has found irregularities including evasion of service tax by misrepresenting information on accounts and fudging records related to commission paid to field associates, agents and brokers, sources said.

The notices, sent under Section 14 of the Central Excise Act 1944, empowers a central excise officer to summon any person whose attendance he considers necessary either to give evidence or to produce a document in an inquiry being undertaken by the officer

                            DEMONSTRATION AT CHENNAI ON 5.10.2012

A powerful demonstration was held on 5.10.2012, friday at LIC Building, Anna Salai, Chennai-600002 to protest against the decision of the UPA government to hike the FDI in insurance sector and to enact the PFRDA and to allow FDI in pension sector as like insurance sector. The Class-I officers association, NFIFWI and the agents also participated in the demonstration. around 500 insurance employees and others participated in the demonstration. The doyen of the Insurance movement com.N.M.Sundaram also participated in the demonstration. Com.S.Ramesh Kumar, General Secretary, ICEU, chennai Division-I, presided over the Demonstration. Com.K.Swaminathan, General Secretary,SZIEF gave special address. Those who attended the demonstration were venting there anger against the governments move in this direction by raising high pitch demo slogans.

55th DIVISIONAL CONFERENCE

The 55 th conference of ICEU, Chennai Division-I will be held on 13 and 14 th October 2012 at LIC Building Premises, Anna Salai, Chennai - 600002. The conference is being held in the  background of aggressive anti-people reforms introduced by the UPA-II government despite severe opposition form the people of India. The retrograde announcements made by central government met with stiff resistance. Already the UPA-II became a minority government. The chameleon of Indian politics Mr. Mulayam singh have helped the government to survive. The announcement of FDI in retail trade, civil aviation, in electricity projects and media smacks arrogance on the part of the ruling establishment. The congress which talks about the aam-admi was thoroughly exposed by the double standards. The conference is going to demand the discredited Manmohan singh to withdraw all the anti-people measures. Com.Amanullah Khan ,President, AIIEA is going to inaugurate the conference. Com.K.Swaminathan, General Secretary  SZIEF is also participating the conference.

Kin of road mishap victim awarded 16.63 lakh by MACT

New Delhi: The family of a photographer has been awarded a compensation of over Rs 16.63 lakh by a Motor Accident Claims Tribunal (MACT) for his death in a road mishap involving the collision of his motorcycle with a truck, parked in the middle of the road.

The MACT asked Reliance Insurance Company, with which the offending vehicle was insured, to pay Rs 16,63,476 to the kin of 30-year-old victim Sonu, who had died on October 16, 2011 night after his bike collided with the wrongly-parked truck.

“In view of the unrebutted testimony of the petitioners (victim's family members) and documents available on record, it is prima facie proved that deceased Sonu died in a road accident due to rash and negligent act of wrong parking of the offending vehicle without observing proper safety measures by respondent no 1 (driver of vehicle),” MACT presiding officer Dinesh Bhat said.

The order came on the victim's family members' plea for compensation.

A police officer who was on patrolling duty in the area where the accident occurred and an eyewitness to the incident, had deposed that the truck was parked facing the wrong way and he had asked the driver to park it correctly, but the driver did not do so.

While he was speaking to the driver, the police officer had said he heard the “noise of an accident” and on checking found the victim lying unconscious on the road.

He had called for a PCR van, in which the victim was rushed to the hospital and the driver of the offending vehicle was arrested on the spot, the police officer had said.

Truck driver Jagdish had denied committing any negligence and had stated that the offending vehicle had to be stopped due to a break down on the road and he had taken proper precaution in this regard.

The driver had also said, the deceased was driving in a rash and negligent manner and had hit against the stationery vehicle, therefore, he himself was responsible for the accident in question

Kotak Mahindra Life Insurance fined Rs 22L

New Delhi: Insurance regulator IRDA today slapped a fine of Rs 22 lakh on Kotak Mahindra Old Mutual Life Insurance for violation of various norms, including payment of death claims.

"I direct the insurer (Kotak Mahindra Life) to remit the penalty of Rs 22 lakh by debiting shareholder's account, within a period of 15 days," Insurance Regulatory and Development Authority (IRDA) Chairman J Hari Narayan said in an order.

Kotak Mahindra, the order said, violated the guidelines on group insurance policies by not paying the small value death claims directly to the beneficiary. The insurance company routed the claims through the NGO, instead of paying it directly to the beneficiaries as required under the law.

The insurance company, IRDA said, has violated the guidelines by not paying the death claims on grounds of non-submission of additional documents.

"... It is held that the claim repudiations on the basis of non-submission of requirements called for is violation (of regulation) ... and a penalty of Rs one lakh is imposed under the Insurance Act," IRDA said.

IRDA also advised Kotak Mahindra Life to revise its claim manual procedures in line with the regulations.

The insurance regulator has also hauled up Kotak Mahindra Life for inserting a clause to deny death claims within 3 months from the date of policy in its group insurance schemes.

"The insurer is directed to reopen all such claims which are repudiated because of inclusion of this lien clause and examine and decide on the same. The action taken be confirmed to the IRDA," the order said.

IRDA also found Kotak Mahindra violating the rules with regard to reimbursement of administrative expenses to master policyholders many of whom were acting as its corporate agents.