Cholamandalam fined 10 lakh by IRDA for violating corporate agency guidelines

Cholamandalam general insurance has been levied Rs. 10,00,000 (Rs. 5,00,000 each for financial years 2007-08 and 2008-09) fine by the Insurance Regulatory and Development Authority of India (IRDA) for violating the provisions of various regulations, guidelines and circulars.

This penalty has been slapped on the insurer due to the violation of guidelines issued on licensing of corporate agents which stipulates that the insurer should not pay any amount other than the permitted agency commission to the corporate agent as per current guidelines. This is a violation of Regulation 10(1) (vi) (ii) of the Insurance Advertisement and Disclosure Regulations, 2000 which permits a third party to share information about its members and collect compensation based on sales. However, payment of compensation for solicitation by third-party entities is not covered under this Regulation.

IRDA also directed the Cholamandalam General Insurance to not to pay or offer to apy any extra payouts which are not provided for in the Insurance Act, 1938.