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Posted on Jun 28, 10:46PM | IANS
Chennai, June 28 : The Insurance Regulatory and Development Authority (IRDA) slapped a fine of Rs.1.47 crore on HDFC Standard Life Insurance Company.
Passing the penalty order, which was made public Thursday, IRDA chairman J. Hari Narayan said: "...I hereby direct the insurer (HDFC Standard Life) to remit the penalty of Rs.1.47 crore."
"A penalty of this nature is a regulatory necessity in order to impress upon the management of any insurance company that regulatory prescriptions have to be complied with at all times and failure to do so will entail appropriate regulatory action," Hari said in the order delivered Wednesday.
He directed that the penalty should be debited to the shareholders' account and not the policyholders' account so that the cost of non-compliance by the management was not borne by the policyholders but by the shareholders.
A bulk of the penalty was levied for rejection of death claims under the insurer's home loan protection policy in case where the death occurred within 90 days of policy becoming effective.
The IRDA had directed HDFC Standard Life to scrap this condition in 2003 when it accorded the sanction for the product.
However, during its inspection, the IRDA found that the company rejected 21 death claims under the 90 days exclusion clause.
Imposing a fine of Rs.1.05 crore (at the rate of Rs.500,000 per rejected claim), the IRDA ordered the company to report the claims and settle them within 30 days of its order.
The IRDA also fined HDFC Standard Life Rs.3,500,000 for paying excess remuneration to four group companies - HDFC, HDFC Bank, HDFC Securities and HDB Financial Service - for services like selling policies, marketing expenses and others.