CBI probes if IRDA favoured Anil co Looks Into Why Fine On Rel General Was Reduced From `17.5K Cr To `20L The Central Bureau of Investigation has initiated a preliminary inquiry to probe if the Insurance Regulatory and Development Authority (IRDA) had favoured Anil Dhirubhai Ambani Groups (now Reliance Group) Reliance General Insurance Company while levying a Rs 20-lakh penalty for “unauthorized“ sale of a health cover. CBI spokesperson Kanchan Prasad confirmed that a preliminary inquiry has been registered to find out if there was mala fide intent in the decision taken in July 2009. The agency said that unknown officials have been named in the preliminary inquiry , which is the first stage of investigation.The CBI, which has examined former IRDA chairman J Hari Narayan and other officers of the IRDA, is looking at the circumstances under which the penalty was “brought down“ from a possible Rs 17,500 crore. The issue dates back to 200809 when Hari Narayan sought an investigation regarding allegations that Reliance General was selling a medical insurance policy without getting the product approved by the regulator. In December 2005, Reliance General had filed for approval for `Reliance Health Care Policy, which was cleared by the regulator in February 2006, CBI sources said. When IRDA s guidelines were revised in September 2006 for `file and use of insurance products, fresh clearance was required if the name of the product was changed. In 2008, the IRDA found that Reliance General was selling a scheme called `Reliance Health Wise, which had not been approved by it, and was seen as a violation of the guidelines. Hari Narayan said the policy being sold by Reliance General had five differences from the one that was approved by the IRDA, which treated each variation as a violation of the rules. Given that the law provided for a maximum penalty of Rs 5 lakh for every violation, the IRDA issued a show-cause notice for a penalty of Rs 25 lakh, he told TOI over phone. “When we received the reply, we realized that one of the changes had actually benefited the consumers, so we treated it as four violations. In my judgment, I had said that the company had sold close to 3.5 lakh policies, we could treat each policy as a violation and in that case the penalty would be Rs 17,500 crore. Since the show-cause mentioned Rs 25 lakh, I couldnt have gone beyond that level while levying the final penalty ,“ he said, adding that this case attracted the heaviest financial penalty at that time. Hari Narayan said till then the IRDA had levied financial penalties in very few cases and the maximum penalty was Rs 5 lakh. He said there were at least two other cases involving National Insurance and HDFC Ergo where he had decided to interpret section 102 of the Insurance Act and contemplate penalty based on the number of policies sold. “It was my interpretation (meant) to scare the industry ,“ he said. When contacted, a Reliance General spokesperson said, “The allegation that penalties of Rs 17,500 crore could have been imposed in this matter is baseless, unfounded and devoid of any legal foundation.“ The company had earned premium income of around Rs 80 crore from the policy and claims added up to Rs 140 crore. Hari Narayan said the accountant general had raised some questions when it reviewed the case and they had been answered by the IRDA. On August 8, BJP MP Udit Raj had raised a question in Parliament on whether IRDA had reduced the penalty for any private insurer and whether the government had conducted any inquiry in this regard.
Posted on: Mon, 13 Oct 2014 11:19:15 +0000
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