Chennai, Jan 17 (IANS) India’s insurance regulator IRDA Friday rejected a plea by HDFC Standard Life insurance company and ordered the firm to comply with directions given in September 2013 to reopen all settled death claims and pay an increased amount under two of its policies.
Referring to HDFC Standard Life’s representation Dec 6, 2013, T.S. Vijayan, chairman of the Insurance Regulatory and Development Authority (IRDA), directed the company to comply with the earlier order.
“On examining the matter, the authority did not find any new information or mitigating facts which were not already taken into consideration while issuing such directions and therefore, the representation submitted could not be considered,” Vijayan said in his letter.
In September, the IRDA ordered HDFC Standard Life to reopen all settled death claims and pay an increased amount under two of its policies and also to raise the sum assured for other policy holders.
The IRDA found HDFC Standard Life discriminating between two sets of policyholders – those who had bought the HDFC Life Sampoornam Samridhi Plan and HDFC Classic Assure Plan before March 31, 2012, and those who bought the policy after April 1, 2012.
According to the regulator, the private life insurer had offered higher benefit to those who had bought the two policies after April 1, 2012 while the premium outgo for both remained the same.
The IRDA said HDFC Standard Life altered the insurance value through an endorsement assuring additional death benefits which is equivalent to higher of 10 times annualised premium or the death benefit as defined in the policy under two of its products for those who bought the policies on or after April 1, 2012.
For those who bought the products prior to that date, the death benefits payable were the basic sum assured, reversionary bonus plus interim and terminal bonuses, if any.
The company debited to its shareholders’ account the additional premium amount for the higher cover for those who bought the policies on or after April 1, 2012.
The IRDA did not agree with the insurer’s contention that the additional benefit was offered to those who bought the policies on or after April 1, 2012, as the rules relating to tax exemption were changed.
Terming the insurer’s action as discriminatory between the two sets of policy holders, the IRDA directed the company to reopen claims on policies prior to April 1, 2012, (from the date of launch of two policies) and settle the additional amount within 60 days of the order.
Reiterating the rationale for IRDA’s decision, Vijayan told IANS last year: “All the life insurers faced the same problem. However, nobody had a similar issue except HDFC Standard Life. The company violated the regulations and the direction was accordingly given.”
Industry experts told IANS that the business of life insurers was to transact life insurance business and not turn tax consultants.
HDFC Standard Life is a joint venture between Housing Development Finance Corporation Ltd and Standard Life plc, Britain.