The Insurance Regulatory and Development Authority of India (Irdai) has slapped a fine of Rs 1 crore on Royal Sundaram General Insurance (RSGI) for certain issues of non-compliance during financial years 2018-18 and 2019-20.
The penalty was imposed after a remote inspection conducted between 14 September 20202 and 25 September 2020 found some irregularities. Among others, here are two areas where irregularities were found.
Irdai had noted irregularities in RGSI’s claim-handling process. Many claims were initially closed because the insureds had not submitted the required documents even after repeated reminders. The insurer did reopen the claims after receiving the necessary documents, but Irdai pointed out the delay in claim settlement and the fact that the insurer did not adhere to the health regulations of 2016, which lay down some rules regarding the claims process.
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Irdai also concluded that the insurance company did not follow a customer-centric approach. The regulator made it clear that a truly customer-centric approach would mean timely resolution of claims and also transparent communication during the process, both of which are laid down under the Health Regulations 2016.
Role Of Irdai
The role of Irdai is to oversee the insurance industry and also ensure that insurance companies follow the guidelines that have been laid down to protect the interests of the policyholders.
Irdai expressed strong concerns about the RGSI’s practices and highlighted the deficiencies in governance. They also issued a warning to the insurer and cautioned them, against further lapses going ahead.
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Irdai is the primary regulatory body responsible for overseeing the insurance industry in India. It ensures that insurance companies follow the guidelines established to protect policyholders' interests. It also works to safeguard policyholders' interests by closely regulating insurance companies' operations and ensuring that they function fairly and transparently.
Irdai requires that life and health insurers settle a claim within 30 days of receiving all necessary documents. If the insurer fails to settle the claim, it must pay interest on the amount. The interest is two percent higher than the bank rate. However, if the insurer suspects fraud, it may take longer to settle a claim.
