In a stark change from the regular rulings for penalty payments on violations, the Insurance Regulatory and Development Authority of India (IRDAI) has asked SBI Life Insurance to pay a refundable amount with an interest rate of 2 percent above the bank rate.
This was in reference to a case where the regulator said that additional payments of administrative expenses were made by the insurer.
IRDAI said that with respect to their group insurance product Super Suraksha, SBI Life has made payments at the rate of 20 percent of single premium towards reimbursement of administrative expenses amounting to Rs 204.71 crore to 14 Group Master Policyholders.
This amount, said the regulator, will be calculated from the expiry of six months from the date of these directions to the date of actual payment.
When the order was passed in October 2012 on the same case, IRDAI had said that the insurer should identify the members/beneficiaries as the case may be of each master policy against which the life insurer has reimbursed the administrative expenses as a percentage of premium. The insurer had also later appealed to the Government of India which had in turn remanded the matter to IRDAI for deciding the case.
Further, the insurer was also asked to distribute the wrongful administrative charges paid, amongst the respective members/beneficiaries of each master policy by way of refund.
As per the new insurance norms, an insurance company can approach the Securities Appellate Tribunal if they are not satisfied with an order of IRDAI.