IRDAI Fines Reliance General Insurance Rs 1 Crore
Why in the news
IRDAI fined Reliance General Insurance ₹1 crore for lapses relating to commissions, outsourcing and corporate governance.
Key facts
- Trigger: a remote inspection in 2021; IRDAI examined four charges under the Insurance Act, 1938 and rules.
- Penalty power used: Section 102(b), which allows penalties when an insurer breaches the Act or its regulations.
| Norm | What it requires | Finding |
|---|---|---|
| Section 40, Insurance Act | Caps commission paid to agents and intermediaries | Money routed as marketing and awareness spending was held to be disguised, overriding commission |
| Outsourcing Regulations | Transparent, justified, arm’s-length outsourcing | An individual agent of another insurer was hired for advertising with no clear selection process or rationale |
| Corporate Governance Guidelines | Strong controls, transparency, board oversight | Large payments lacked checks, showing weak internal controls |
| Payment of Commission Regulations | Stick to set commission structures | Marketing-labelled payments were commission in substance |
Exam angle
- Regulator IRDAI; Act: Insurance Act, 1938.
- Section 40 = commission limits; Section 102(b) = penalty.