Insurance sector regulator IRDA has imposed fine of Rs 1.47 crore on HDFC Life Insurance -- the highest ever penalty on any insurer -- for violation of various regulatory provisions.
"... hereby direct the insurer (HDFC Life Insurance) to remit the penalty of Rs 1.47 crore," IRDA said in a strongly-worded order.
"A penalty of this nature is a regulatory necessity in order to impress upon 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," the order signed by IRDA Chairman J Hari Narayan said.
The regulator has slapped fines of different amounts on various violations. The maximum penalty of Rs 1.05 crore was imposed in a case of death claim under home loan protection policies. The claim was denied in a case where death occurred within 90 days from the date of commencement of the policy despite IRDA advising the insurer to delete this exclusion clause.
"This clearly shows the scant regard paid by the insurer to the directions of the Authority on a matter which critically affects the policyholder welfare," it said.
Commenting on the IRDA order, HDFC Life said, the company in the process of evaluating the order in detail and shall comment on it and provide clarifications in the coming days.
"We however respect the concerns raised by the regulator and are committed to abiding by them. We would like to assure our policy holders and all stakeholders that this order will not impact our committed service levels," it said.
Last month, IRDA had imposed a fine of Rs 1.18 crore on ICICI Prudential Life Insurance for violations that include paying agents and brokers commissions exceeding the permissible limits. This penalty is now the second highest imposed by the regulator.