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SBI Life to appeal against IRDA's order

The regulator in its order had charged SBI Life of misrepresenting the nature of the policy, paying excess commission to agents

March 12, 2014 5:25 IST | India Infoline News Service
The Insurance Regulatory and Development Authority (IRDA) on Tuesday asked SBI Life Insurance to refund Rs. 275 crore or 44 percent of the Rs 625 crore premium it had collected against issuing Dhanaraksha Plus Limited Premium Paying Term (LPPT) policy.
“It is found during onsite inspection conducted in December, 2010 that SBI Life Insurance has offered Dhanaraksha Plus Limited Premium Paying Term (LPPT) Group Insurance Product which was a 2 year premium paying term plan, by collecting second year’s premium upfront along with the first year premium,” IRDA said in a notification.
“93% of second year premiums were received in advance along with first year premiums in 2008-09, 94% in 2009-10 and 97% in 2010-11,” it added.
Thus the premium collected is more on lines of a Single Premium than two yearly regular premiums against the approved File and Use features, IRDA said.
“Had the single premium version of product been offered to the policy holders, the actual commission payable would have been only 2 percent," the regulator said, adding that the insurer had "adopted business practices in violation of prescribed regulatory norms."
However, SBI Life said that the insurer had not violated any norms and that it would appeal to IRDA chairman against the order.
The regulator in its order had charged SBI Life of misrepresenting the nature of the policy, paying excess commission to agents and not providing buyers of an informed choice.
SBI Life said that it will appeal against the third point as according to the insurer buyers were given an informed choice.

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