The Insurance Regulatory and Development Authority (Irda) has accused SBI Life of unfairly benefiting its corporate agents in the sale of Dhanraksha Plus, a limited premium paying term policy, and asked the insurer to refund Rs 275 crore to policyholders. According to IRDA, the policy (Dhanraksha Plus) had a two-year premium paying term, but the company collected more than 90% of the second-year premium upfront in the first year between 2008-09 and 2010-11.
However, it paid its corporate agents, most of whom incidentally were SBI and its associate banks, two years' commission-40% for the first year and 7.5% for the second year.
The regulator noted that the policy also had a single-premium version, but the company floated a twoyear version only to benefit its agents.
"Had the single premium version of product been offered to the policy holders, the actual commission payable would have been only 2%," observed Irda. SBI Life collected Rs 625 crore under the two-year plan of the policy between 2008-09 and 2010-11, and hence has been asked by the regulator to refund 44% of that amount to the policyholders. Irda has been investigating the case since December 2010 and already imposed a penalty of Rs 5 lakh on SBI Life in September 2012. Dhanraksha Plus offers cover against an outstanding loan and is offered with all kinds of loans.
The policy was sold mostly by State Bank of India and its associate banks. Meanwhile, SBI Life in a statement said that the company had not violated any norms and that it would appeal to the Irda chairman against the directive. "We will seek a review in the matter as per the recourse available to us under the Insurance Act and other statutes," said SBI Life in a statement.
