IRDAI Imposes Rs25 lakh penalty on SBI General Insurance; Rs3 Lakh on Royal Sundaram General Insurance
The Insurance Regulatory and Development Authority (IRDAI) has slapped a penalty of Rs25 lakh on non-life insurer SBI General Insurance Company Ltd and a penalty of Rs3 lakh on Chennai-based Royal Sundaram General Insurance Company Ltd for violation of violation of Motor Insurance Service Provider (MISP) guidelines.
 
IRDAI says SBI General Insurance did not fulfil its minimum obligation relating to underwriting motor third party insurance during financial year 2017-18. Due to repetitive nature of non-compliance and magnitude of violation, the adjudicating officer had earlier recommended a penalty of Rs1 crore. However, taking into consideration the submissions of the insurer that they are committed and are entering into various tie-ups to fulfil the motor third party (MTP) obligation, the IRDAI imposed a penalty of only Rs25 lakh.
 
In its order, the IRDAI had said that considering the repetitive nature of the violation and the magnitude of violation, a penalty of Rs25 lakh is levied on SBI General Insurance. According to IRDAI, the penalty should be paid online after debiting the company shareholder’s account.
 
“The Insurer did not comply with the MTP Obligation for the FY 2017-18 calculated as per Regulation 3 of IRDAI (Obligation of Insurer in respect of Motor Third Party Insurance Business) Regulations, 2015. During the FY 2017-18, the Insurer has underwritten Rs329.73 crore as against the minimum obligatory MTP Insurance business of Rs434.33 crore resulting in a shortfall of Rs104.60 crore. In percentage terms, the shortfall works out around 24.08% of the MTP Insurance business obligation,” the order said. 
 
“For the financial year 2017-18, the insurer did not fulfill the obligation and had a shortfall of Rs104.6 crore (24.08%), which amounts to non-compliance of Regulation 3 of IRDAI (Obligation of Insurer in respect of Motor Third Party Insurance Business) Regulations, 2015. The Insurer had not fulfilled the MTP obligations during the immediate previous financial year 2016-17 with a significant shortfall of Rs146 crore (38.59%),” the order added.
 
The insurer argued that it has never refused any “liability only” policy and there was no malafide intention on their part. The insurer added that it has not made any disproportionate gain or unfair advantage as a result of the shortfall in complying with motor third party (MTP) obligation. Further, it has not caused any loss to policyholders insured by it due to the shortfall.
 
In a separate order, the IRDAI penalised Royal Sundaram General Insurance for violation of MISP guidelines. The regulator has also warned Royal Sundaram for non-submission of information that was sought by it and directed to ensure submission of information and documents sought during its inspections.
 
The insurance regulator has taken the decision on the show cause notice dated 8 August 2020 issued to Royal Sundaram following its onsite inspection of the insurer during August 2018.
 
According to IRDAI, the penalty should be paid online by Royal Sundaram General Insurance after debiting the company shareholder's account.
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    COMMENTS

    sureshtb4246

    4 weeks ago

    Very shameful, SBI Being imposed penalty of 25 lakhs, reduced from one crore, by IRDAI. Earlier, RBI HAD ALSO PENALISED SBI for mutual fund (payment to staff - commission), and various other non compliance. Apart from this, the banking ombudsman, civil Court and complaints under Consumer protection act, all this put together proves that functioning of SBI IS MUCH BELOW average. NON OF THE AUTHORITIES, RBI/ FINANCE MINISTER/MINISTRY ARE DOING ANYTHING TO SET right SBI. VERY SHAMEFUL

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