IRDA asks SBI Life to refund Rs 275 crore
Mar 13, 2014
Source : The Times of India
MUMBAI: In a move that will benefit 7.5 lakh borrowers of State Bank of India Group, the insurance regulator has asked SBI Life to refund Rs 275 crore of premium collected from policyholders, which makes it the biggest refund order in insurance history. The life insurer, which was earlier fined for mis-selling its Dhanraksha Plus LPPT through SBI and associate banks, has now been asked to refund excess commission that it has paid out of premium collected under this policy.

The beneficiaries of this order will be those who purchased Dhanraksha Plus LPPT between 2008-09 and 2010-11. The policyholders will get 44% of the Rs 625 crore premium that they collectively paid for the cover. According to sources, these policies were sold to those who availed of home loans from SBI and its associate banks during this period. The policy was intended to cover the outstanding loan in case of death of the policyholder during the term of the loan.

In its order, the regulator said that SBI Life had positioned this plan as a two-year premium paying term but collected premium upfront from policyholders. This was despite the fact that the insurance company had a single premium version of the product. IRDA said that by positioning the scheme as a two-year premium paying plan, the insurer was able to pay 40% of the first year premium and 7.5% of the second year premium as commission to the bank. "Had the single premium version of product been offered to the policy holders, the actual commission payable would have been only 2%. Hence, it can be concluded that the large scale sale as single premium payment policy has only facilitated higher commission payments to the insurance intermediaries involved who are predominantly SBI and its associate banks," IRDA said in its order.

The regulator has said that by doing so the insurer had committed three offences: misrepresenting the nature of the policy, paying excess commission to corporate agents and not providing buyers with an informed choice. In 2012, the regulator had imposed a penalty of Rs 5 lakh on the insurance companies. However, subsequent investigations by the regulator showed that an excess payment of 44% of one instalment of the regular premium received upfront along with the New Business Premium in the first year was made to the corporate agents.

"Accordingly, an amount of Rs 275 crore (around 44% of regular premium of Rs.625.67 crore received in advance upfront along with the First Year's premium ) is considered as refundable to the members/beneficiaries of the group insurance schemes under which the premiums are wrongly collected during 2008-09, 2009-10 and 2010-11," said the order.

Following this, IRDA had issued a show-cause notice to SBI Life in April 2013, asking it why as to why the directions be not issued under Section 34 of the Act for refunding the above referred quantum of excess commission paid to the members of the group insurance policies. After hearing submissions from SBI Life on June 2013 and following a hearing on December 4, 2013, IRDA decided to issue the refund order.


Latest Realty News

DDA to be restructured to make it more efficient
Mar 13, 2014
DELHI: The Delhi Development Authority (DDA) will restructure its operations in a bid to enhance efficiency and productivity.
NH8 – A viable investment corridor
Mar 13, 2014
DELHI: National Highway 8 has been playing a crucial role in catering to the people coming from all corners of the country by facilitating the growth of commercial and residential investments along this stretch. Realty projects under construction along NH-8 cover a stretch of 15km through Haryana and present multiple options for investors in search of early-bird investment opportunities.
RMC intensifies tax recovery drive
Mar 13, 2014
RAJKOT: Intensifying its tax recovery drive across the city to meet its financial year target of Rs 170 crore, Rajkot Municipal Corporation (RMC) is using various means from beating of drums to warn defaulters to disconnecting water supply. The local civic body disconnected water supply of five defaulters on Tuesday.
Surat Municipal Corporation recovers Rs 480 crore property tax
Mar 13, 2014
SURAT: Against the current demand of Rs 607 crore for year 2013-14, recovery department of Surat Municipal Corporation (SMC) has recovered property tax of Rs 480 crore by the end of February, 2014.
Godrej Properties adds new project in Mumbai through pact with Godrej & Boyce
Mar 13, 2014
MUMBAI: Godrej Properties, the real estate development arm of the Godrej Group, has entered into a pact with group company Godrej & Boyce to develop a new project on the latter's property at Vikhroli suburb of Mumbai, the company said in a release.
Jung plans facelift operation for DDA
Mar 13, 2014
DELHI: A thorough restructuring is in store for the Delhi Development Authority. According to information issued by Delhi LG's office, an exercise will be carried out "not just to revamp the DDA but to equip it with modern processes to enhance its efficiency."
CCI may penalise DDA
Mar 13, 2014
DELHI: After imposing a hefty fine of Rs 1,773 crore on state-owned Coal India Ltd, the Competition Commission of India (CCI) might now soon penalise a government agency, the Delhi Development Authority (DDA).
NBCC to redevelop govt projects in 3 cities
Mar 13, 2014
DELHI: After the much-talked makeover of government flats in Delhi’s Moti Bagh, public sector company National Buildings Construction Corporation (NBCC) is looking outside the national capital. NBCC is planning to redevelop at least three government housing projects worth Rs 5,000-6,000 crore in other parts of the country.
SC to Hear Sahara Plea Thursday
Mar 13, 2014
DELHI: The Supreme Court will Thursday hear the plea by Sahara group chief Subrata Roy challenging the court's March 4 order sending him to judicial custody, which he described as illegal.
SC to Hear Sahara Chief's Plea Today
Mar 13, 2014
DELHI: A two-member Supreme Court Bench will on Thursday take up a petition filed by Sahara chief Subrata Roy demanding his immediate release on the grounds that his detention is illegal and unconstitutional. “Declare the order dated March 4 as void, nullity and non-est in the eyes of law,” said the habeas corpus filed on Wednesday.

Latest Realty News Of State

Realty Talk's