The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a fine of Rs 1 crore on Royal Sundaram General Insurance (RSGI) for non-compliance with outsourcing regulations in the financial years 2018-19 and 2019-20. The penalty followed a remote inspection by IRDAI between September 14-25, 2020, which revealed several regulatory violations.
The inspection found that RSGI had made payments exceeding Rs 50 crore to vendors in FY 2019-20, but failed to disclose these in their outsourcing returns submitted to IRDAI. This lack of transparency and non-compliance with regulations raised concerns about the insurer’s governance and regulatory compliance.
The inspection also identified issues with claims management, including irregularities in RSGI’s claims handling processes, resulting in delays and lack of alignment with Health Regulations, 2016. The insurer had reopened 53,354 claims worth Rs 123.43 crore and closed 6,466 claims worth Rs 34.99 crore, but IRDAI criticized the delays and lack of transparency.
IRDAI also questioned RSGI’s claim of having a customer-centric approach, citing that a truly customer-centric approach requires timely resolution of claims and transparent communication throughout the process. The regulator warned RSGI against further lapses in claims handling and regulatory compliance, emphasizing the importance of transparency, adherence to regulations, and robust governance systems in the insurance sector to ensure policyholder confidence and regulatory integrity.
The penalty and warning serve as a reminder to insurance companies to prioritize compliance with regulations and transparency in their business practices to maintain trust and confidence from policyholders and regulatory bodies alike.