Who is responsible - Insurer or Regulator? ...for rejected claims Under condition which was supposed to be removed (by insurer in 2003) as per regulator's instruction from protection plan! Till Apr-2011 same plan with same condition was sold!

Penalty on HDFC Standard Life Seen as Warning

Source : Daijiworld.com

A warning bugle for the industry is what life insurance officials say of the Rs.1.47 ($333,000) crore penalty imposed by the insurance regulator IRDA on HDFC Standard Life Insurance Company Ltd. last week.

According to officials, the Insurance Regulatory and Development Authority (IRDA) may start directing the companies to fix official responsibility for various violations of its regulations.

"Perhaps the next action could be that if one goes by the trend. Initially, the IRDA levied just a fine. 

It then started multiplying the fine amount with the number of violations. 

Now it has asked HDFC Standard Life to debit the penalty levied to its shareholders’ account," D. Varadarajan, a Supreme Court lawyer who specialises in company and insurance laws, told IANS.

Though IRDA has the power to cancel the licence of an insurer for violating its regulations, this is too extreme a step and will have a wide-ranging impact, he added.

The appointment of the CEO and an actuary of an insurance company needs IRDA’s approval, officials said.

Last week IRDA levied a penalty of Rs.1.05 crore on HDFC Standard Life for rejecting 21 death claims under its home loan protection policy under the 90-day exclusion condition. The IRDA had specifically asked the company to delete the clause while approving the product in 2003, but the company sold its policies with that clause till April 2011.