Insurance regulator IRDAI has imposed a penalty of Rs 15 lakh on HDFC Standard Life Insurance for violation of various regulations including the one for payment to brokers under the name of skill building.
On scrutiny of the documents pertaining to the observation, it is found that the employees of the brokers were sponsored for foreign trips in the name of training, Insurance Regulatory and Development Authority of India (IRDAI) said in its order. Certainly, foreign trips to the employees of the brokers influence the brokers to sell the products of a particular insurance company by acting as a defacto-agent thereby defeating the objective of insurance broking model, it said.
Hence treating this is as a violation of regulation IRDAI levied a penalty of Rs 5 lakh on the life insurer. The penalty comes even as the merger proposal of HDFC Standard Life Insurance and Max Life insurance is pending for clearance from the regulator.
The regulator also found the insurer guilty violation of File and Use guidelines. Keeping in view the life insurer's approach towards adhering to File and Use Guidelines and pertinent regulations or circulars etc, it said, Rs 5 lakh is levied on the company.
The penalty of Rs 20 lakh shall be debited to the shareholders' account of the life insurer and the amount shall be remitted to IRDAI within a period of 15 days from the date of receipt of this Order, it said.