IRDAI Fines Canara HSBC Life ₹1 Crore

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹1 crore on Canara HSBC Life Insurance Company Limited for mis-selling a life insurance policy to an 88-year-old customer.

The regulatory proceedings were initiated after IRDAI took suo motu cognizance of a social media post highlighting the sale of the policy to the senior citizen. The policy carried an annual premium of ₹2 lakh payable for four years and was sold through Canara Bank, the insurer’s corporate agent.

The customer’s daughter was named as the annuitant under the policy. During its examination, IRDAI found that the approved product permitted entry only for customers between 30 and 80 years of age. However, the proposer was 88 years old when the policy was sold.

The regulator also observed that the insurer had failed to undertake an adequate assessment of the customer’s financial circumstances and the suitability of the product, particularly considering his age and the sizeable premium commitment. IRDAI identified additional shortcomings in the sales process, including deficiencies in the verification call, proposal form and disclosure of key policy features.

The benefit illustration did not contain a verifiable acknowledgement from the policyholder, while the Customer Information Sheet and proposal form were not provided to the customer at the time of sale. The regulator also noted that the premium was collected before the policy was issued.

It further found that the implications of the proposer’s death during the premium-paying period had not been adequately explained to the customer. The IRDAI action is a significant step towards protecting the interests of insurance policyholders, particularly senior citizens.

In a separate development, IRDAI has proposed the creation of a Public Insurance Registry (PIR), a digital public infrastructure intended to build a more connected, transparent and efficient insurance ecosystem. According to the regulator, the proposed registry would help reduce information gaps and promote greater competition among insurers and other market participants.

This, in turn, is expected to encourage innovation in insurance products, competitive pricing, improved services and a better customer experience. The IRDAI’s initiatives are aimed at strengthening the insurance sector and ensuring that policyholders receive fair treatment.

The fine imposed on Canara HSBC Life Insurance Company Limited serves as a reminder to insurance companies to adhere to regulatory guidelines and prioritize the interests of their customers. The IRDAI’s actions demonstrate its commitment to protecting policyholders and promoting a fair and transparent insurance market.

In conclusion, the IRDAI’s decision to fine Canara HSBC Life Insurance Company Limited is a significant step towards ensuring that insurance companies operate in a fair and transparent manner. The proposed Public Insurance Registry is also expected to play a crucial role in promoting competition and innovation in the insurance sector, ultimately benefiting policyholders.