Winning Bizness Desk
Mumbai. The Insurance Regulatory and Development Authority of India (IRDAI) has levied a ₹1 crore fine on SBI Life Insurance for multiple regulatory violations, including improper handling of death claims and non-compliance with outsourcing and web aggregator regulations. The financial penalty highlights serious issues in the company’s adherence to sectoral guidelines and underscores the regulator's commitment to protecting policyholders' interests. A primary reason for the fine was SBI Life’s failure to process 21 death claims, all of which occurred within three years of policy issuance. The insurer attributed the rejections to insufficient evidence of death. However, after reviewing the cases, IRDAI found that the company was unable to provide enough documentation to justify the rejections. In response, IRDAI issued a stern directive to SBI Life, urging it to exercise greater caution and care in handling such sensitive claims. It emphasized that death claims must be managed with utmost responsibility, and negligence will not be tolerated.
Additionally, IRDAI identified several violations related to the insurer's collaboration with web aggregators. SBI Life had partnered with platforms like Policybazaar, MIC Insurance, Compare Policy, Easypolicy, and Wishfin without establishing formal agreements that clearly outlined service responsibilities and fee structures. The absence of proper documentation around these partnerships raised concerns about the company's transparency and accountability. IRDAI stressed that SBI Life’s outsourcing policies were in violation of existing rules, directing the company to revise its policies to ensure compliance.
Another significant issue was SBI Life’s outsourcing practices. The regulator found that the company had failed to disclose payments amounting to ₹1.93 crore made to a third-party firm, Extent Marketing and Technologies, between FY 2017-18 and 2018-19. These payments were linked to services outsourced by SBI Life, but the details were not properly communicated to the regulator. Additionally, IRDAI's investigation revealed that 95% of the revenue generated by these vendors was being transferred to other third parties, raising further concerns about the management of outsourced services.
In light of these findings, IRDAI has mandated that SBI Life bring its outsourcing practices in line with regulatory guidelines and ensure proper disclosures in the future. The regulator’s action serves as a reminder of the stringent rules governing the insurance sector, with customer protection and transparency at the forefront. This fine comes at a time when SBI Life is one of the leading players in the Indian life insurance market. The company is expected to take corrective measures to restore compliance and maintain its market position amidst growing regulatory scrutiny.
