SBI Life told to distribute excess payments to policyholders
New Delhi: Insurance sector regulator IRDA has directed SBI Life Insurance Company to distribute the "wrongful" component of administrative charges it paid as reimbursement of group expenses to commission agents to the members or beneficiaries of the concerned policies.
As per the guidelines, life insurers are not allowed to pay towards management expenses, documentation expenses, profit commission, bulk discount or any other payment to the agent, corporate agent, group organiser or group manager.
SBI Life Insurance had made certain payments towards reimbursement of group administrative expenses to various master policy holders, which were in "violation" of IRDA guidelines and for which it was imposed a penalty of Rs 70 lakh in July, 2011.
"For this purpose (distribution), recalculate the premium chargeable for each member of each Group Insurance Scheme of the Life insurer without taking into consideration 20 percent of premium that is paid to Master Policy Holders," Insurance Regulatory Authority of India (IRDA) said in its directive.
"Distribute the wrongful administrative charge amongst the respective members/beneficiaries of each Master Policy by way of refund...," it added.
The schemes in question included 'Super Suraksha' policies on home, car and tractor loans.
The regulator said these payments to master policyholders were not in the interest of the general policyholders.
IRDA directed SBI Life to identify the member or beneficiaries for each master policy, against which reimbursement were made towards administrative expenses as a percentage of premium.
IRDA said the directives should be immediately initiated and be completed within six months.
SBI Life Insurance is a joint venture between State Bank of India and France's BNP Paribas Cardif. SBI owns 74 percent of the total capital, while the French insurer owns the rest.