New Delhi: Insurance regulator IRDA Friday slapped a fine of Rs 22 lakh on Kotak Mahindra Old Mutual Life Insurance for violation of various norms, including payment of death claims.
"I direct the insurer (Kotak Mahindra Life) to remit the penalty of Rs 22 lakh by debiting shareholder's account, within a period of 15 days," Insurance Regulatory and Development Authority (IRDA) Chairman J Hari Narayan said in an order.
Kotak Mahindra, the order said, violated the guidelines on group insurance policies by not paying the small value death claims directly to the beneficiary. The insurance company routed the claims through the NGO, instead of paying it directly to the beneficiaries as required under the law.
The insurance company, IRDA said, has violated the guidelines by not paying the death claims on grounds of non-submission of additional documents.
"... It is held that the claim repudiations on the basis of non-submission of requirements called for is violation (of regulation) ... And a penalty of Rs one lakh is imposed under the Insurance Act," IRDA said.
IRDA also advised Kotak Mahindra Life to revise its claim manual procedures in line with the regulations.
The insurance regulator has also hauled up Kotak Mahindra Life for inserting a clause to deny death claims within 3 months from the date of policy in its group insurance schemes.
"The insurer is directed to reopen all such claims which are repudiated because of inclusion of this lien clause and examine and decide on the same. The action taken be confirmed to the IRDA," the order said.
IRDA also found Kotak Mahindra violating the rules with regard to reimbursement of administrative expenses to master policyholders many of whom were acting as its corporate agents.