Irdai slaps Rs 17 lakh fine on Future Generali for violating regulations

Insurance sector regulator Irdai has imposed a penalty of Rs 17 lakh on Future Generali India Insurance Co Ltd for violating norms on protection of policyholders’ interests and selling policies without seeking prior approval from the authority. The penalty has been slapped on the insurer post an on-site inspection by the Insurance Regulatory and Development Authority of India (Irdai) during January 15-25, 2018, followed by response from the insurer in November 2020 and personal hearing of the company’s key personnel in January 2021.Future Generali violated rules under ‘File & Use’ guidelines by selling up-approved add-on covers without approval of the authority. It also violated Protection of Policyholders’ Interests Regulations by restricting the available options to the prospect at the point of sale.

In a sample of 17 motor insurance policies, it was found that an add-on cover referred as ‘Plan 1-C’ was offered by insurer without filing and taking approval from Authority under Product filing procedure .For the violation of Product Filing guideline by offering the add-on cover prior to authority’s approval, the authority levies a penalty of Rs 1 lakh. For the violation of Regulation 3(2) of IRDA (Protection of Policyholders’ Interests) Regulations, 2002 on offering the add-on cover without obtaining consent of policyholder which took place on 16 different days, the authority levies a penalty of Rs 16 lakh.

Irdai directed the company to ensure that the products/add-on covers should be offered only after taking the consent of the prospect, and any add-on cover or a product shall be offered only after filing under the Product filing guidelines and after approval by the Authority. There were other charges related to solvency margin calculation, appointment of surveyors and loss assessors and health insurance regulations, for which the regulator gave directions and advisories to Future Generali. The penalty of Rs 17,00,000 shall be remitted by the insurer through NEFT/RTGS (bank account details will be communicated separately) by debiting shareholders’ account within a period of 45 days from the date of receipt of this order.