In a rare intervention, the finance ministry has asked the insurance regulator to reconsider its order directing SBI Life to pay ₹84.31 crore to its group insurance members/ beneficiaries.
In June 2008, the Insurance Regulatory and Development Authority (IRDA), during an onsite inspection at SBI Life, found that the company had paid ₹204.71 crore to 14 ‘Master Policyholders’ in contravention of its regulations. The master policyholders, in this case, were the banks that sold SBI Life’s home loan product.
In 2011, the regulator had levied a fine of ₹70 lakh on SBI Life, reserving its rights to take further action in the matter. SBI Life paid the penalty.
Later, in 2012, the regulator ordered the life insurer to distribute ₹84.31 crore to members/beneficiaries of the respective group insurance policies. Following this order, SBI Life appealed to the regulator, which rejected the petition. SBI Life then filed an appeal with the Finance Ministry, which heard both parties in February this year.
In its order dated November 2015, the Finance ministry said that the main contention of SBI Life is that the policyholders’ interest was not adversely affected at any point nor was there any loss to the policyholders of SBI Life-Super Suraksha as the same loading of 20 per cent administration expenses was considered in the replacement product, SBI Life-Dhanaraksha. The Ministry then referred the case back to the IRDA. Nilesh Sathe, Member-Life at IRDA, said the regulator would take a re-look at the order. Arijit Basu, MD and CEO of SBI Life said did not want to comment on the matter.
SBI Life has also filed an appeal with the Securities Appellate Tribunal challenging the IRDA order for a ₹275-crore refund. The insurance regulator had asked SBI Life to refund this policy amount to all policyholders citing irregularities in the way the Dhanaraksha Plus policy was sold.