The Insurance Regulatory and Development Authority of India today levied Rs 20 lakh penalty on ICICI Prudential Life Insurance for violating norms including arranging foreign trips for employees of corporate agency.
Irdai had conducted an onsite inspection of ICICI Prudential Life Insurance Company Limited during December 9, 2013 to December 18, 2013. The inspection covered the activities of the Life Insurer for the financial years 2011-12 and 2012-13.
The regulator imposed penalty on the insurer for making payouts to group master policyholders in the name of marketing support fee for display of their products in their premises.
The regulator noted that the insurer had floated various sales campaigns under rewards and recognition programme wherein foreign trips were arranged and gifts cards were distributed to the employees of the Corporate Agents directly.
Also, the regulator raised concerns about ICICI Prudential Life's agreement with corporate agents and making considerable payouts for display of publicity material of insurer at their branches.
The regulator further imposed penalty on the insurer for contests were floated to the employees of the brokers and remunerated them with gift cards; Sodexho vouchers etc., and also arranged foreign tours to the employees of the Brokers based on the rewards and recognition programmes.
In their response, ICICI Prudential Life Insurance said that rewards and recognition programs for all intermediaries have always existed in the insurance industry in order to boost the morale and to recognize performers.
"These programs help insurers in garnering business efficiently, as they are designed to provide rewards to good performers," the company said. "Trips pertaining to business review performances are attended by a limited group, product launches and training and awareness sessions are attended by a larger group and include persons nominated by the corporate agent."
Recently, Irdai has introduced new commission guidelines wherein rewards and recognition is not allowed for corporate agents.
As per the new guidelines introduced only in the corporate agents regulations, 2015, and accordingly, such contest and reward initiatives pertaining to Corporate Agents were discontinued, the insurer said in its response.
Irda did not levy any penalty for seven other charges including not settling maturity claims within prescribed time and advised the company to comply with the regulations.