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Irdai slaps Rs 17 lakh fine on Future Generali for violating certain regulations

Insurance sector regulator Irdai has imposed a penalty of Rs 17 lakh on Future Generali India Insurnace Co Ltd for violating norms on protection of policyholders’ interests and selling policies without seeking prior approval from the authority. The penalty has been slapped on the insurer post an on-site inspection by the Insurance Regulatory and Development Authority of India (Irdai) during January 15-25, 2018, followed by response from the insurer in November 2020 and personal hearing of the company’s key personnel’s in Janaury 2021.

The authority had conducted an on-site inspection of Future Generali India Insurnace Co Ltd during January 15-25, 2018.

The inspection report revealed certain violations of provisions of the Insurance Act regulations, guidelines and various circulars issued thereunder, Irdai said in a circular on its website on Monday.

Future Generali violated rules under ‘File & Use’ guidelines by selling up-approved add-on covers without approval of the authority. It also violated Protection of Policyholders’ Interests Regulations by restricting the available options to the prospect at the point of sale, Irdai said.

In a sample of 17 motor insurance policies, it was found that an add-on cover referred as ‘Plan 1-C’ was offered by insurer without filing and taking approval from Authority under Product filing procedure, Irdai said.

“The add-on cover is not filed with the authority under ‘Product Filing’ guidelines. The add-on cover was offered without taking consent of the prospect.”

For the violation of Product Filing guideline by offering the add-on cover prior to authority’s approval, the authority levies a penalty of Rs 1 lakh. For the violation of Regulation 3(2) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002 on offering the add-on cover without obtaining consent of policyholder which took place on 16 different days, the authority levies a penalty of Rs 16 lakh, said the regulator.

Irdai directed the company to ensure that the products/add-on covers should be offered only after taking the consent of the prospect, and any add-on cover or a product shall be offered only after filing under the Product filing guidelines and after approval by the Authority.

Out of total of six charges on Future Generali, charges were pressed in one case only.

There were other charges related to solvency margin calculation, appointment of surveyors and loss assessors and ‭health insurance regulations, for which the regulator gave directions and advisories to Future Generali.

“The penalty of Rs 17,00,000 shall be remitted by the insurer through NEFT/RTGS (bank account details will be communicated separately) by debiting shareholders’ account within a period of 45 days from the date of receipt of this order,” said the regulator.

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