Irda imposes Rs40 lakh penalty on Aegon Religare Life

Irda imposes Rs40 lakh penalty on Aegon Religare Life
PTI
See this story in: mint

New Delhi: Insurance sector regulator Insurance Regulatory and Development Authority (Irda) has imposed a Rs40 lakh penalty on Aegon Religare Life Insurance Company for violating various guidelines.

Irda said it found the private sector insurer in violation of guidelines related with protection of policyholders’ interest, obligations to rural and social sectors, corporate governance, data sharing and outsourcing guidelines.

“In conclusion, as directed under the charges, the penalty of Rs40 lakh shall be remitted by the insurer…within a period of 15 days from the date of receipt of this order,” Irda said in an order to Aegon Religare Life Insurance.

The company did not furnish copies of the proposal forms for the polices to the policyholders, Irda said. To this, the regulator stated that, “…mere provision of the acknowledgement of receipt or policy schedule to the policyholder does not ensure compliance.”

The authority has taken a serious view of the violation and the insurer is directed to modify the laid down process, it added.

On corporate governance guidelines, Irda said there were significant delays in processing the surrender requests or settlement and advised the company to ensure compliance at all times with claims processing process.

Irda also warned the company for not having put in place suitable systems as consent of assignee were not taken to enable policy alterations such as change of name and address and top up premium.

It also cautioned and directed the insurer to streamline their claim settlement process in line with extant regulations.

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Complete Discussion on SBI LIFE ‘Thagi Ka Beema’ on CNBC Awaaz.

Complete Discussion on SBI LIFE ‘Thagi Ka Beema’ on CNBC Awaaz.

Please refer to complete episode of SBI LIFE on CNBC Awaz. Also listen to some FALTU suggestion given by so called Experts on TV Channel. My Personal View: Either they are not aware of Insurance Industry or it is dialogues are scripted. Put your comments

http://youtu.be/Alc9a0_r3qw

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Regulator may permit agents to sell policies of multiple insurers

Regulator may permit agents to sell policies of multiple insurers
Deepa Nair
The Hindu Business Line

Mumbai: Insurance agents may soon get to diversify their revenue streams as the insurance regulator is considering permitting them to sell policies of multiple insurers as well as other financial products, such as mutual funds and pension plans.

They will be able to do so if the new distribution concept of an insurance marketing firm mooted by the Insurance Regulatory and Development Authority (IRDA) becomes a reality.

This proposal comes at a time when the life insurance industry is facing heavy agent attrition.

During 2012-13, the life insurance industry saw a 10 per cent decline in the number of individual agents — from 23.58 lakh as on March 31, 2012, to 21.22 lakh as on March 31, 2013.

Insurers feel that selling only insurance policies is not very lucrative for agents, especially due to rationalisation of the commission structure under the new product regulations implemented by the IRDA.

Sustainable revenue
According to the draft regulations for insurance marketing firms released by IRDA recently, these intermediaries can sell insurance products of multiple insurance companies. It can also retail other financial products such as mutual funds and National Pension System products approved by financial sector regulators.

Currently, the insurance regulator allows only a tied system of agents, whereby each agent is only allowed to sell policies of one life insurer, one non-life insurer and a standalone health insurer.

Manoj Jain, MD of Shriram Life Insurance, said the insurance marketing firm model will allow intermediaries who are industry veterans to recruit other agents which will ensure that the revenue stream comes from various products.

V Manickam, Secretary General of Life Insurance Council, which has been organising seminars on the feasibility of insurance marketing firms in major cities said it has got encouraging response from intermediaries.

Draft regulations
In the draft regulations for insurance marketing firms, IRDA has spelt out stricter liability in the sales process.

This will be in the form of fiduciary responsibility, and geographical restrictions, in terms of operating in only one district.

Amitabh Chaudhry, MD and CEO, HDFC Life Insurance, said: “It’s a great move by the regulator as in the current model there are too many agents selling too few policies. So, we need independent financial firms over a period of time selling a larger number of policies to a larger number of people.”

However, Chaudhry said the model will take some time to gain traction as the intermediaries will analyse the new model to see whether the rewards and the extra obligations they have to take on are favourable.

Manickam said while some of the current recommendations may be restrictive as the model is still in the concept stage, there will be some scope for changes as more intermediaries start opting for it.

The Life insurance Council will send recommendations gathered from the life insurance companies by the month-end, after which the IRDA will release the final regulations

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From Oct, service tax to make LIC policies pricier

From Oct, service tax to make LIC policies pricier
Rajalakshmi Sivam & Deepa Nair
The Hindu Business Line

Chennai / Mumbai: This means if the annual premium for your money-back policy from LIC is Rs 10 lakh, you will have to pay an additional Rs 30,000.

While private insurers add a service tax component to the premium paid by customers, LIC has not been levying the tax on its popular endowment and money-back plans.

From October, however, all LIC policies will attract a separate service tax, says a senior company official. LIC collected Rs 1,87,000 crore as premiums towards its non-unit linked polices in 2011-12.

IRDA diktat
In a recent announcement, insurance watchdog IRDA (Insurance Regulatory and Development Authority) mandated that service tax shall not be included in the contractual premium, but collected from policyholder separately.

Speaking to Business Line, a senior official from LIC said, “We will start charging service tax of about 3 per cent upfront to policyholders from October 1, as prescribed by the IRDA.

“We are currently absorbing the service tax as a part of the policyholder’s funds, as the share capital of the Government (which is our owner) is just around Rs 100 crore.”

He further explained that when service tax is charged separately, LIC may be able to pay higher bonuses on the policies.

All along LIC has been paying the service tax from the money in the policyholders’ account (which holds the premium collected and income from investments). It is the surplus in this account that is declared as bonus on traditional plans.

Customers may, however, see this move only as an additional burden.

A few LIC agents whom Business Line spoke to said the service tax was a deterrent particularly for immediate annuity plans and single premium products where the premium is usually large.

“LIC may lose the advantage over other traditional plans from private insurers now, and though this may come as a shock to customers initially, they will slowly get accustomed to the new normal”, said an LIC agent.

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Haryana govt bars ICICI Prudential for 3 years

Haryana govt bars ICICI Prudential for 3 yrs
CHANDIGARH: The Haryana government has barred ICICI Prudential Life Insurance for three years from doing any further business with it or any of its departments for “intentionally delaying” the process of distribution of annuity to land owners and failure to carry out commitments.

“ICICI Prudential Life Insurance Company needed to be blacklisted,” the state’s Finance Department said in a statement.

When contacted, the company declined to comment on the matter.

“The noticee can, however, opt to pay compounding fee in lieu of entire or a part of the black listing period within one month from the date of this order.

“…this is by paying penal interest at a rate of one per cent for every six months or part thereof of the blacklisting period proposed to be compounded, by making a request to the government in this regard,” the statement said.

Such enhanced rate of interest would be payable on the amount advanced to noticee for the period from date of receipt of advance till the date of repayment of advance and interest at SBI base rate to the Department, it said.

Necessary orders for allowing compounding of the black listing period will be passed after receipt of the requisite compounding fee, it added.

An Expression of Interest was issued in February, 2011 inviting bids from insurance companies and banks for the purpose of providing services for disbursement of annuity to the land owners under the R and R Policy of the state government.

The bid-cum-tender document were submitted by ICICI Prudential on March 31, 2011.

Thereafter, several rounds of discussions were held between the noticee and the state government with respect to various stipulations and condition stated in the draft Services Level Agreement, it said.

This included the obligation of the noticee as the Service Provider with respect to collection and validation of data of the beneficiaries under the scheme of annuity, it added

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NEW UNDERWRITING RULES EFFECTIVE FROM 08/03/2013

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NEW UNDERWRITING RULES EFFECTIVE FROM 08/03/2013

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Haryana blacklists SBI Life for delaying annuity payments

Haryana blacklists SBI Life for delaying annuity payments
PTI
See this story in:The Financial Express

Chandigarh: SBI Life Insurance company has been “blacklisted” by Haryana government for allegedly delaying the process of distribution of annuity to land owners under the Resettlement and Rehabilitation (R&R) Policy of the state government.

While giving this information in an release here today, an official spokesman of the Finance Department said, “Haryana government has blacklisted SBI Life Insurance Company Limited and cancelled the bid awarded to it for delaying the entire process of distribution of annuity to the land owners under the state’s R&R policy.”

He further said stringent actions, including debarring SBI Life Insurance from doing any further business with the State or any of its department could also be taken as per the law.

The official spokesman said that an Expression of interest (EOI) was issued in February, 2011 inviting bids from Insurance Companies or Banks for purposes of providing services for disbursement of annuity to the land owners under R&R policy of the state government.

The bid cum tender document was submitted by SBI Life Insurance on March 31, 2011.

He said that after receipt of the bid documents, several rounds of negotiations and discussions were held with respect to various stipulations and conditions stated in the draft Service Level Agreement (SLA) including the obligation of the noticee as service provider with respect to collection and validation of data of the beneficiaries.

The spokesman further said decisions regarding the contract were taken by the government on July 25, 2011 and August 11, 2011 for making payment of annuity under R&R policy by allocation of work amongst the selected insurance companies. A letter of intent (LoI) was issued to noticee on September 6, 2011.

The said LoI was also issued on specific and unambiguous stipulation that the LoI would be subject to execution of Service Level Agreement (SLA).

This was expressly communicated to the noticee that the government reserved its right to withdraw the said LOI in the event of failure of noticee to execute the Service Level Agreement, he added.

He said that the State Government in performance of its obligation as expressed under the LOI duly advanced payment in favour of noticee towards 50 per cent purchase consideration and allocated area of operation to noticee.

The noticee accepted the said advance payment knowing fully well that the state government has rejected its repeated requests for a change in the fundamentals of the EOI that is collection and validation of data, the official said.

In so far as the government was concerned, the issue relating to data was resolved, and the noticee had accepted the said condition of collection and validation of data, he further added.

He said that in furtherance of the agreed and accepted condition of LOI, the government vide its letter dated January 4, 2012 forwarded the SLA duly approved by it and called upon the noticee to sign the same with its concerned departments.

However, despite repeated reminders, including ones dated January 27, 2012 and February 3, 2012, for execution of the SLA, SBI Life failed to execute the same again for the same “frivolous” reasons of non deletion of the clause relating to the collection and validation of data, he said.

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New Jeevan Nidhi -812

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Flexi Plus Table No-811

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