Insurance industry regulator Irdai has called on Go Digit General Insurance (Go Digit) to stop a product offering life insurance benefits in violation of regulatory standards.
India’s Insurance Regulatory and Development Authority (Irdai) has also asked the insurer to remove advertisements for the product from all media.
Irdai said that a notice of justification (SCN) was issued in August 2021 because deficiencies were observed in complying with the provisions of the insurance law.
After a personal hearing chaired by Irdai (non-life) member TL Alamelu in October with company executives, the regulator said no insurer should conduct insurance business in India unless ” have obtained a registration certificate for a particular class of insurance. Business.
The case concerns the modification of the Total Protect policy of the Digit group by the insurer in July of this year, under which an additional section bearing the name of âMajor Illness Cover Plusâ was incorporated into the policy.
The regulator said that after reviewing the modified version of the product, it was found to provide two benefits in the event that the eventual covered event is triggered. One of the services concerns the payment of the sum insured upon diagnosis and / or surgery of a serious illness.
Another concerns the payment of an additional benefit amount in the event that the policyholder does not survive until the end of the insurance period due to the same critical illness and / or surgery for which the request was admitted.
The product provides insurance coverage for 82 critical illnesses.
Irdai said providing an additional benefit amount to policyholder’s applicants / legal heirs in the event of non-survival falls within the definition of life insurance business.
Go Digit was asked to immediately withdraw the said clause as part of the policy in August and was also asked to send the action report to the Authority.
Following a rehearing on the matter and a personal hearing, Go Digit argued that the benefit offered under the proposed clause did not fall within the life insurance business but with various insurance matters. defined by the Insurance Act of 1938.
The insurer had also asked the Authority to withdraw the communication and the SNA issued in the case.
The Authority, in its decision, however, declared that the insurer’s request was not acceptable and declared that providing the death benefit cover or the insurance of payment of money on the death of the policyholder Insurance itself falls under the definition of life insurance business, although limited to the critical illnesses mentioned in the policy.
The insurer’s assertion that the additional benefit offered in the product clearly falls within the realm of health insurance and that it is allowed to engage in this business is not considered defensible, Irdai said, adding that “It is observed that there is no merit to be considered in the arguments of the insurer”.
âNotwithstanding the instruction given to the insurer to discontinue the Digit group’s total protection policy, the Authority reserves the right to take other measures in the event of violation of the provisions of the law. The insurer is invited to place this order at the immediate meeting of the board of directors and to send the certified copy of the minutes to the Authority â, in accordance with the Irdai ordinance.
(Only the title and image of this report may have been reworked by Business Standard staff; the rest of the content is automatically generated from a syndicated feed.)