Irdai imposed a Rs 2 crore penalty on HDFC Life. The penalties resulted from irregularities found during a 2020 inspection covering 2017-2020.
HDFC Life Insurance is imposed with a penalty of Rs 2 crore by the Insurance Regulatory and Development Authority of India (Irdai) for flouting norms, according to a recent Irdai statement. The company needs to pay the penalty within 45 days of the day of receipt. Along with this, there are also additional directives.
The regulator said that it penalized HDFC Life due to violation of norms related to policyholders’ interests, web aggregators, and insurance distributors.
Irdai also instructed the life insurer to carry out due diligence before entering into outsourcing contracts and reviewing its vendor management agreements. The company also must submit to Irdai a detailed action plan on outsourcing contracts and other violations.
Says the company: “Irdai issued an Order dated August 01, 2024, levying a penalty in aggregate of Rs 2 crore for violation of provisions of applicable Irdai regulations: Penalty of Rs 1 crore concerning certain aspects about Protection of Policyholders’ interest; penalty of Rs 1 crore concerning certain aspects of Outsourcing of services undertaken by the Company and payment of Commission or Remuneration or Reward for solicitation of insurance business.” According to Irdai, its main interest is to safeguard the interests of policyholders and ensure the structured expansion of the insurance industry in the country.
Moreover, Irdai instructed the insurers to place the order before the board of the company and provide the minutes of the meeting to the regulator. The regulator must also submit to the company an action taken report detailing the action taken on the directions within 90 days of the order’s receipt.
According to the company’s filing in an exchange, after an onsite inspection the penalty was reportedly imposed, related to the financial years 2027-28, 2018-19, and 2019-20.
Along with financial penalties, Irdai has also given strict guidelines to the company on directions and advisories to adhere to within a specific time frame to correct the inadequacies and ensure compliance with the regulatory standards.
Moreover, Irdai said that the insurer must place the order before the board of the company and provide the minutes of the meeting to the regulator.
The insurer can approach the Securities Appellate Tribunal if it is aggrieved by the order.
According to the Irdai website, it is a statutory body formed under an Act of Parliament, i.e., the Insurance Regulatory and Development Authority Act, 1999 (Irda Act, 1999) for overall supervision and development of the Insurance sector in India.