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14
September 2017
 |
The Securities Appellate Tribunal(The Total Investment & Insurance
Solutions)
The
Securities Appellate Tribunal (SAT) has to decide on the refund of around Rs
275 crore to policy holders, a senior official of SBI Life Insurance Company
said on Thursday. The Total Investment
& Insurance Solutions
"The
case is pending in SAT. We have no say on it now," SBI Life Insurance President
M. Anand told reporters here.
It has
been more than two years since the Insurance Regulatory and Development
Authority of India (IRDAI) ordered SBI Life Insurance to refund Rs 275.29 crore
collected in excess commission to holders of Dhanaraksha-Plus Limited Premium
Paying Term policy. The Total
Investment & Insurance Solutions
In
March 2014, IRDAI ordered SBI Life to refund Rs 275.29 crore excess commission
collected to holders of Dhanaraksha-Plus Limited Premium Paying Term
policy. The Total Investment &
Insurance Solutions
In
February 2015, IRDAI chairman T.S. Vijayan again directed SBI Life to implement
its March 2014 order.
SBI
Life's policy in question has two premium payment options -- single-premium and
two-year premium paying plan. The Total
Investment & Insurance Solutions
In the
case of single-premium policy, the premium for the entire policy period is collected
upfront. The commission paid on that cannot be more than two per cent as per
the Insurance Act. The Total Investment
& Insurance Solutions
On the
other hand, the premium under the two-year premium paying plan is slightly
higher and the commission rate is 40 per cent on the first year premium and 7.5
per cent on the second year premium.
According
to IRDAI, SBI Life's corporate agents -- mostly State Bank of India and its
associate banks -- did not reveal to the policy holders the availability of the
single-premium option. The Total
Investment & Insurance Solutions
The
corporate agents sold the two-year premium payment plans. They collected the
premium for two years in advance. This is done mainly to pocket 40 per cent
commission on the first year premium and 7.5 per cent on the second year
premium. The Total Investment &
Insurance Solutions
The
IRDAI found out this practice during its on-site inspection of SBI Life's
books. The Total Investment &
Insurance Solutions
According
to the Red Herring Prospectus of SBI Life, the SAT in its April 2015 order
noted that the counsel for the IRDAI stated: "Till next date of hearing,
no coercive steps would be taken by IRDAI in relating to impugned orders and
thus an ad-interim relief has been granted and such order continues to be valid
till the date of the Red Herring Prospectus."The Total Investment & Insurance Solutions
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