Monday, May 19, 2014

IRDA Penalises Reliance Life For Violating Norms

Insurance watchdog, the Insurance Regulatory and Development Authority (IRDA) has imposed a penalty of Rs 1.77 crore on Reliance Life Insurance Company (RLIC), a part of Anil Ambani's led Reliance Capital, for violating norms.

The regulator has found that the private insurer had violated a number of norms by getting business from entities which were not licensed to do business in the life insurance sector. IRDA asked the insurer to pay the penalty within 15 days. By doing this, the regulator has given a strong message in the insurance sector that it will not tolerate any unfair businesses or violations that may impact a consumer directly or indirectly.

Recently, a major insurance scam had come into light, wherein an insurance broking company had duped more than 2,000 people by selling policies of Reliance Life Insurance Company on false promises. The agents had lured people by giving false offers, such as provision of interest-free personal loan accounting 10-times the amount of premium paid. The insurer terminated the broking firm; however, thousands of investors have lost their savings.

The regulator found Reliance Life guilty for violating about 47 norms set by the IRDA. The insurer violated norms including marketing, advertising and distribution.

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