The Insurance Regulatory and Development Authority of India (IRDAI) has fined HDFC Life Insurance Rs 2 crore for breaking various rules. The company has 45 days from receiving the order to pay the penalty and must follow additional guidelines issued by the regulator.
IRDAI found that HDFC Life violated rules regarding policyholders’ interests, web aggregators, and insurance distributors. This penalty comes after an onsite inspection by IRDAI in September 2020, which reviewed the company’s operations for the financial years 2017-18, 2018-19, and 2019-20.
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A fine of Rs 1 crore was imposed for not protecting policyholders’ interests, and another Rs 1 crore was levied for issues related to outsourcing services.
IRDAI on Thursday (1 August, 2024) issued an order detailing these penalties of Rs 1 crore for not safeguarding policyholders’ interests and Rs 1 crore for outsourcing irregularities, including improper payment of commissions or rewards for soliciting insurance business. HDFC Life reported this in its filing with the stock exchange on Thursday.
In addition to the financial penalties, the Insurance Regulatory and Development Authority of India (IRDAI) has given HDFC Life Insurance further instructions and recommendations. The company must follow these guidelines within a set timeframe to fix the identified issues and comply with regulatory standards.
IRDAI has directed HDFC Life to review its vendor management agreements and ensure thorough checks before entering into outsourcing contracts. The company is also required to submit a detailed action plan to IRDAI, addressing the outsourcing contracts and any other violations.
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Furthermore, IRDAI has instructed HDFC Life to present the order to its board of directors and provide the minutes of the meeting to the regulator. The company must also submit a report to IRDAI within 90 days, detailing the actions taken in response to these directives.
If HDFC Life disagrees with the order, they can appeal to the Securities Appellate Tribunal.
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