The insurance company paid excess commission to Barclays Investment and Loans (India) for FY08 and FY09. IRDA has imposed a fine of Rs 10 lakh on Max Life Insurance for paying higher commissions than what is permitted to its corporate agent – Barclays Investment and Loans (India). The insurance company gave incentives to the corporate agent in the form of other expenses like advertising cost, infrastructure etc. Earlier, IRDA had penalized Aviva Life Insurance and IndusInd Bank for a similar violation. As per the Insurance Act 1938, an insurance company shall not pay any amount other than the permitted agency commission, whether as administration charge, reimbursement of expenses, profit commission or any other form to corporate agents. Also, an insurer cannot reimburse its corporate agents for co-branded advertisements. In this case, Max Life Insurance’s returns filed with the regulatory authority suggested that the company has paid an excess commission of Rs 4.56 crore and Rs 50.79 lakh to Barclays India in FY2008-09 and 2009-10 respectively. Shriram Subramanian of InGovern Research Services believes that a penalty of Rs 10-20 lakh may not deter insurance companies to violate such norms. He suggests that the penalty should be increased to Rs10-20 crore. Earlier, the authority had sought explanation and clarification in the matter from Max Life Insurance. The life underwriter had presented its case before IRDA in May this year. IRDA had also called for the invoice copies raised by the corporate agent to examine the case. So far, IRDA has not penalized Barclays India for accepting higher commissions. The regulatory body has asked Max Life Insurance to pay the penalty within 15 days from the date of order i.e. on or before July 31, 2013. irda| max life insurance| barclays investment and loans (India)| Cafemutual welcomes your comments. Any disagreements or criticisms must be expressed in a dignified manner. Thank you.
Posted on: Fri, 26 Jul 2013 20:04:17 +0000
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