Summary: The Insurance Regulatory and Development Authority of India (IRDAI) passed an Order against M/s Canara HSBC Life Insurance Company Limited following enforcement proceedings arising from allegations of mis-selling a life insurance policy to an 88-year-old senior citizen. The proceedings followed suo-motu cognizance by the Authority of a social media post and subsequent explanations sought from the Insurer. The matter concerned a deferred annuity policy carrying an annual premium of Rs. 2 lakh and a four-year premium-paying term, sold through the Insurer’s corporate agent, Canara Bank, with the customer’s daughter shown as annuitant. IRDAI found that the approved product permitted an entry age of only 30 to 80 years, whereas the proposer was 88 years old. It also identified deficiencies in suitability and financial assessment, verification calls, proposal documentation, disclosure of policy features and other solicitation processes. The benefit illustration lacked verifiable acknowledgement, the Customer Information Sheet and proposal form copy were not provided at the point of sale, premium was collected before policy issuance, and the consequences of the proposer’s death during the premium-paying term were not adequately disclosed. The Competent Authority held that these deficiencies collectively constituted mis-selling and inadequate policyholder protection. The Insurer subsequently refunded the full premium of Rs. 4.09 lakh, including the second-year premium, reversed the commission and undertook corrective measures. IRDAI imposed a penalty of Rs. 1 crore under Section 102 of the Insurance Act, 1938 for violations of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024, the IRDAI (Corporate Governance for Insurers) Regulations, 2024 and the Master Circular on Protection of Policyholders’ Interests, 2024. The Insurer was also directed to audit policies sold to persons above 75 years through Canara Bank, strengthen corporate-agent oversight, implement Bima-ASBA across distribution channels, place the Order before its Board and submit an Action Taken Report.
Insurance Regulatory and Development Authority of India
Press Release | 10th September 2026
Order in the matter of Canara HSBC Life Insurance Company Limited
The Insurance Regulatory and Development Authority of India (IRDAI) passed an Order against M/s Canara HSBC Life Insurance Company Limited (‘Insurer’) pursuant to enforcement proceedings arising from allegations of mis-selling of a life insurance policy to an 88-year-old senior citizen. The proceedings were initiated after the Authority took suo-motu cognizance of a social media post and sought explanations from the Insurer.
The case related to the sale of a deferred annuity policy with an annual premium of Rs. 2 lakh and a four-year premium-paying term, through the Insurer’s corporate agent, Canara Bank, to an 88-year-old customer, with his daughter shown as the annuitant.
On examination, the Competent Authority found that the approved product specified an entry age of 30 to 80 years, whereas the proposer was 88 years old. It also found that adequate suitability and financial assessment had not been undertaken despite the customer’s advanced age and the significant premium commitment. Deficiencies were also observed in the verification call, proposal form, disclosure of policy features and other solicitation processes.
It was further observed that the benefit illustration did not have verifiable acknowledgement by the policyholder, the Customer Information Sheet and proposal form copy were not provided at the point of sale, premium was collected prior to policy issuance, and the consequences of the proposer’s death during the premium-paying term were not adequately disclosed.
The Competent Authority held that, taken together, these deficiencies demonstrated failures in adherence to approved product features, suitability assessment, solicitation and verification, proposal processing, disclosure and internal controls, and constituted mis-selling and inadequate protection of the policyholder.
Subsequently, upon the matter coming to its notice, the Insurer met the policyholder and, at his request, refunded the full premium of Rs. 4.09 lakh, including the second-year premium, and reversed the commission. The Insurer also undertook corrective measures, including revision of the product brochure, policy document and suitability assessment framework, and introduction of pre-issuance video-based validation calls.
After considering the facts and submissions, the Competent Authority imposed a penalty of Rs. 1 crore (Rupees One Crore only) under Section 102 of the Insurance Act, 1938, for violations of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024, the IRDAI (Corporate Governance for Insurers) Regulations, 2024 and provisions of the Master Circular on Protection of Policyholders’ Interests, 2024.
The Competent Authority also directed the Insurer to undertake a comprehensive audit of policies sold to proposers/policyholders above 75 years of age through Canara Bank, strengthen the oversight framework governing its corporate agents, and ensure full and effective implementation of the Bima-ASBA facility across all distribution channels.
The Insurer has also been directed to place the Order before its Board and submit an Action Taken Report within the stipulated period.
The detailed Order is available at Order in the matter of Canara HSBC Life Insurance
IRDAI remains committed to ensuring robust policyholder protection, fair and transparent solicitation, suitability of insurance products, good governance and accountability across the insurance sector. The Authority will continue to take appropriate supervisory and enforcement action wherever regulatory violations are observed.
Insurance Regulatory and Development Authority of India
Ref: IRDAI/PP&GR/ORD/MISC/118/9/2026
Order in the matter of Canara HSBC Life Insurance Company Limited arising out of Show Cause Notice- No. IRDAI / PP&GR / CHOICE / 2025-26 / LR / 20 dated 12th March 2026
1. Based on the:
1.1. Show Cause Notice (SCN) reference No. IRDAI / PP&GR / CHOICE / 2025-26 / LR / 20 dated 12th March 2026 issued by Insurance Regulatory and Development Authority of India (Authority) to M/s Canara HSBC Life Insurance Company Limited (Insurer) in connection with alleged mis-selling of a life insurance policy to an 88-year-old senior citizen.
1.2. Submissions made by the Insurer vide letter dated 3rd April 2026 in response to the aforesaid SCN.
1.3. Submissions made by the insurer during the personal hearing held on 30th April 2026 before the panel of two Whole-Time Members of the Authority comprising Shri Deepak Sood-Member (Non-Life) and Shri Swaminathan Iyer (Member-Life).
1.4. Further submissions made by the insurer vide email dated 21st May, 2026.
2. Background
2.1. The Authority, upon taking suo-motu cognizance of a viral social media post, dated 08.02.2026 on platform ‘X’, noted serious allegations of mis-selling of a life insurance policy by M/s Canara HSBC Life Insurance Company Limited (Insurer) through its corporate agent, Canara Bank. The post, authored by Mr. Saket R, alleged that an 88-year-old senior citizen, Shri Venkatachalam V. Iyer, a long-standing customer of Canara Bank’s Sadar Bazar Branch, Nagpur, was
2.2. The Authority, recognising the gravity of the allegations, immediately directed its attention to the protection of policyholders, particularly senior citizens and vulnerable groups, and took up the matter with the Insurer for its comments and clarifications vide emails dated 09.02.2026 and 10.02.2026. The Insurer responded vide emails dated 09.02.2026, 11.02.2026 and 15.02.2026.
2.3. On thorough examination of the Insurer’s responses, the Authority found several lapses in the solicitation, underwriting, and issuance of the policy in question and, accordingly, issued a Show Cause Notice (SCN) on 12th March 2026. The Insurer submitted its reply to the SCN vide letter dated 3rd April 2026.
2.4. As requested for by the insurer, a personal hearing was granted to the insurer on 30th April, 2026 by the Panel of Two Whole Time Members Shri Deepak Sood (Member-Non Life), Shri Swaminathan Sood (Member-Life) at Head Office of the Authority at Hyderabad.
2.5. On behalf of the Insurer, Shri Anuj Mathur – MD and Chief Executive Officer; Shri Sachin Dutta – Chief Operating Officer; Shri Rishi Mathur – Chief Distribution Officer (Alternate Channels) and Chief Marketing Officer; Shri Manoj Jain – Chief Compliance Officer; Vikas Gupta – Chief Risk Officer and on behalf of the Authority, Shri R K Sharma (ED), Shri A.V. Rao (GM), Shri Gautam Kumar (GM) and Shri Saket Gupta (Manager) attended the hearing.
2.6. The submissions made by the Insurer in its response to the SCN vide email dated 3rd April, 2026, including all enclosures and annexures and those made during the personal hearing held on 30th April, 2026 and those made vide email dated 21st May, 2026 have been carefully examined by the Authority and summarised below:
3. Charge
3.1. The Authority noted that the Insurer, through its corporate agent Canara Bank, sold a non-linked, non-participating individual deferred annuity plan (Product UIN: 136N086V02) to Shri Venkatachalam V. Iyer (Proposer / Policyholder), aged 88 years at the time of proposal, with the life assured / annuitant being his daughter, Smt. Geeta Subramanian, aged 57 years. The annual premium was Rs. 2,00,000 with a premium payment term of 4 years, and deferment period of 4 years, with annuity commencing from February 2030.
3.2. The Authority observed inter alia that:
3.2.1. The product brochure / prospectus did not contemplate the proposer and annuitant being different persons; the entry age criteria of 30-80 years were not applied to the proposer (aged 88 years), constituting a sale beyond the permissible age limit.
3.2.2. No financial underwriting or suitability analysis was undertaken despite the proposer’s advanced age, the premium constituting approximately 20% of his self-declared annual income, and the absence of any documentary proof of financial capacity.
3.2.3. The verification call conducted was materially defective, the caller misrepresented that the policyholder would receive the annuity, whereas in fact, it was the daughter of the policyholder (annuitant) who would be the recipient; the policyholder was not adequately informed of premium payable and mode of payment; and an unverified secondary mobile number appeared on the proposal form.
3.2.4. The proposal form contained a significant geographical inconsistency – the city was recorded as ‘Bangalore’ while the state was recorded as ‘Maharashtra’ indicative of inconsistencies in processing and lacked due application of mind.
3.2.5. In the proposal form, under the head “Bank Details of the Annuitant”, the name and bank account details of Shri Venkatachalam were mentioned indicating that he himself was the annuitant under the policy which contradicts the Insurer’s assertion that the annuitant was his daughter.
3.2.6. The benefit illustration was neither signed nor OTP verified by the policyholder, rendering it impossible to ascertain whether the same was shared with and acknowledged by the policyholder.
3.2.7. The Customer Information Sheet (CIS) and copy of the proposal form were not provided to the policyholder in violation of the clause (8) of Paragraph II of Part A of Section 1 of the Master Circular on Protection of Policyholders’ Interests, 2024.
3.2.8. Premium deposit was collected on 12.02.2025, whereas the policy was issued only on 28.02.2025, in contravention of the clause 4 of para II of Part A of Section 1 of Master Circular on Protection of Interests of Policyholders, 2024.
3.2.9. The bank details of the annuitant recorded in the proposal form were, in fact, those of the proposer / policyholder, rendering the claim that the annuity was intended to be paid to the daughter factually incorrect.
3.2.10. The policy document was silent on the consequence of the death of the proposer prior to completion of the premium payment term – a critical feature not disclosed at the point of sale, depriving the policyholder of informed decision-making.
3.2.11. Commission of 12.50% was paid on the first-year premium, constituting a disproportionately higher share of the permissible EOM limit of 15% for deferred annuity products, thereby skewing sales incentives at the expense of customer suitability.
3.2.12. The Insurer, in its initial response, has submitted that under the terms of the policy, the policyholder is required to pay premiums for a period of four years, upon completion of which the guaranteed annuity payments would commence from February 2030 and would thereafter be payable by the Insurer to the daughter (Life Assured) for her lifetime. Since the policy commenced in February 2025, the proposer was required to pay premiums up to February 2028. Accordingly, as per the Insurer’s submission, the annuity payments were to commence from February 2030, i.e., in the second year following completion of the premium-paying term.
3.2.13. However, upon examination of the Benefit Illustration forming part of the policy documents, it is observed that the annuity payments are shown as commencing from Policy Year 5 and not from Policy Year 6 as stated by the Insurer. Thus, there exists a clear inconsistency between the Insurer’s submission and the representations made in the Benefit Illustration.
3.2.14. It is further observed that neither the Product Brochure nor the Prospectus provides for any option whereby the commencement of annuity payments can be deferred by one year after completion of the premium-paying term. Therefore, the Insurer’s contention regarding commencement of annuity payments from February 2030 is not supported by the policy literature placed on record.
3.2.15. Insurer acknowledged that the other/alternative phone number mentioned in the proposal form was incorrectly captured and had a typographical error of one digit (one digit “6” mentioned in place of “8”).
4. Summary of the Insurer’s Submissions:
4.1. The Insurer submitted that the policy was purchased by Shri Venkatachalam Iyer with a clear and legitimate objective of securing a guaranteed lifelong pension for his daughter, Smt. Geeta Subramanian. The product, being a deferred annuity plan, envisaged the annuitant and proposer as distinct individuals, as evidenced by the separate fields in the proposal form, benefit illustration, and policy document.
4.2. The Insurer contended that entry age criteria are intrinsic risk underwriting parameters applicable exclusively to the annuitant, i.e., the life on whom the insurance / annuity risk is assumed, and not to the proposer/policyholder. Since no mortality or morbidity risk is assumed with respect to the proposer in an annuity contract, no age restriction applies to him.
4.3. The Insurer averred that the verification call made prior to issuance was comprehensive and that the policyholder was duly informed of all key product features, including premium amount, premium payment term, annuity benefits, and free-look provisions. The policyholder confirmed his understanding and did not exercise the free-look cancellation option.
4.4. With respect to the anomaly in the proposal form (city as ‘Bangalore’, state as ‘Maharashtra’), the Insurer acknowledged the discrepancy as an inadvertent typographical error, maintaining that the policyholder’s primary address was correctly recorded as Nagpur, Maharashtra.
4.5. The Insurer submitted that the benefit illustration was shared electronically via SMS link and OTP-verified by the policyholder, and that the system log confirmed successful verification. The non-appearance of the OTP verification stamp on the printed benefit illustration was attributed to a system-related technical error, which has since been rectified.
4.6. The Insurer claimed that premium collection prior to policy issuance was necessitated by the absence of an operationally enabled mechanism to block premium without actual collection, and that the Bima-ASBA facility was introduced only by the Authority’s circular dated 18.02.2025, after the subject proposal was sourced on 12.02.2025.
4.7. The Insurer submitted that upon the social media post going viral, it proactively met the policyholder, and upon his request, refunded the full premium of Rs. 4,09,000/- (including second year premium) and reversed the commission. The Insurer also undertook several corrective measures, including revision of the product brochure, policy document, suitability analysis framework, and introduction of pre-issuance video-based validation calls.
4.8. The Insurer prayed that, in light of the above submissions and the prompt remedial action taken, the Authority may be pleased to close all observations and not initiate penal action.
4.9. Post personal hearing, the insurer submitted that the policyholder, Shri Venkatachalam Vaidyanathan Iyer, was a financially experienced individual with a 31-year banking relationship with Canara Bank, holding term deposits, mutual funds, and prior annuity and ULIP policies. The complaint had been filed by a relative without the policyholder’s knowledge, and the Company had proactively refunded all premiums in full. On the broader question of policies where proposer and annuitant were different, only 6 such annuity policies existed across the entire portfolio, indicating no systemic concern. A review of all policies sourced by the same bank personnel over five years revealed no other complaints.
5. Issues and concerns
5.1. The Insurer’s central contention that entry age criteria apply exclusively to the annuitant and not to the proposer / policyholder is a post-hoc rationalisation that is devoid of merit and cannot be accepted post facto. The product brochure, which is the approved prospectus filed with the Authority under the File & Use procedure and acts as the key document, specifies an entry age of 30 to 80 years under the column ‘Entry Age’ without any qualification that the said criteria are applicable solely to the annuitant. No separate eligibility criteria for proposers were prescribed, nor does the brochure contemplate different individuals acting as proposer and annuitant. The brochure is silent on the death of the proposer, reinforcing the conclusion that the product was designed with the proposer and annuitant being the same person.
5.2. Insurer’s argument that since the annuity risk is borne only on the life of the annuitant, the proposer’s age is irrelevant, is not only contrary to the approved product features on record but also commercially unconscionable. A proposer aged 88 years with a premium payment obligation of four years is inherently a high-risk scenario, particularly in a product that makes no provision whatsoever for the contingency of the proposer’s death during the premium payment term. It was only after the SCN was issued that the Insurer took the pain to insert a policy vesting clause to address this contingency, an omission that further exposes the inadequacy of the product design as applied to the instant case.
5.3. The Insurer’s claim that the File & Use approval applies age limits only to the annuitant is self-serving and contrary to the plain reading of the approved brochure. The Authority reiterates that an insurer cannot unilaterally interpret product parameters post-approval to suit individual sales cases. The approved prospectus constitutes the product as approved by the Authority and must be followed in letter and spirit by the Insurer and its distribution channels. By permitting its authorised corporate agent Canara Bank to sell the product to an 88-year-old individual who was beyond the maximum entry age of 80 years, the Insurer has deviated from the approved product features in violation of Clause 7.2 of Chapter II of Section 2 of the Master Circular on Protection of Policyholders’ Interests, 2024. The said provision makes it incumbent upon the insurer or its authorised representative to use only approved prospectus in order to avoid mis-selling. By not adhering to such a sacrosanct requirement, the insurer has violated the said provision and committed mis-selling of a life insurance policy.
5.4. The conduct of Corporate agent of the insurer in the solicitation process of the insurance policy is unfair as much as it was carried out in an opaque manner.
5.5. The Insurer’s submission that suitability assessment was duly carried out and that financial underwriting was conducted in accordance with its Board-approved policy is not borne out by the facts on record. Regulation 5(9)(d) of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024 explicitly enumerates ‘not taking reasonable care to ensure suitability of the policy to the prospects / policyholders’ as a fundamental component of mis-selling. The sale of a deferred annuity product to an 88-year-old individual – who bore a premium payment obligation of Rs. 2,00,000 per annum for four years, aggregating Rs. 8,00,000, constituting approximately 20% of his self-declared annual income of Rs. 10 lakh without a single documentary verification of his financial capacity, is a textbook case of failure to ensure suitability by the insurer.
5.6. The Insurer’s claim that the proposal ‘fell within predefined financial thresholds’ and therefore warranted no enhanced scrutiny is not correct. The proposition that an 88-year-old customer committing Rs. 8,00,000 in premium over four years did not trigger any heightened suitability or financial underwriting review reflects not merely a process failure but a systemic failure of the Insurer’s duty of care towards a vulnerable customer.
5.7. The Authority notes that the Insurer itself has, post the issuance of the SCN, introduced a control to cap the entry age of the proposer at 75 years – an implicit acknowledgement that the sale to an 88-year-old proposer was neither appropriate nor suitable. This belated internal control cannot undo the breach that has already occurred.
5.8. Clause 7 of Chapter II of Section 2 of Master Circular on Protection of Interests of Policyholders, 2024 read with Regulation 21(7) of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024 provides that Insurers or distribution channels, as applicable, shall be responsible for the solicitation process and conduct of business applicable to them and it also casts responsibility on insurers and distribution channels to put in place a mechanism to avoid mis-selling of insurance policies. However, the insurer fell short of making the sale of insurance policy in fair and transparent manner thus violating Regulation 21(7) of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024.
5.9. At the point of sale, the specific scenario relating to the death of the policyholder prior to completion of premium payments is not communicated clearly in the policy document. The same was also acknowledged by the Insurer. This indicates that the insurer failed to treat the policyholder honestly and fairly and has also failed to pay special attention to the needs of vulnerable groups. Thus, the insurer has allegedly violated the provisions / principles laid down in Clause 2 of Chapter I of Section 2 of Master Circular on Protection of Policyholders’ Interests, 2024.
5.10. The Authority has carefully reviewed the transcript of the pre-issuance verification call and is constrained to observe that it was significantly inadequate as a safeguard against mis-selling. At timestamp 01:57, the caller stated that the annuity amount of Rs. 50,791 per annum ‘will be given to you’ (aapko diya jayega), clearly misrepresenting that the policyholder himself would receive the annuity, whereas it is the annuitant – his daughter – who would be entitled to receive the same. The Insurer’s attempt to explain away this misrepresentation as the use of ‘you’ to personalise communication is rejected as a facile and inadequate justification. A pre-issuance verification call is a critical regulatory safeguard and a formal touchpoint for ensuring informed consent. Any misrepresentation of the fundamental benefit structure of the product during such a call directly undermines the integrity of the entire disclosure framework.
5.11. The proposal form contained a manifest inconsistencythe annuitant’s city was recorded as ‘Bangalore’ and the state as ‘Maharashtra’. This is not a trivial administrative error; it is indicative of lack of due diligence where underwriting parameters are given a go by the sales team. It is also indicative of the fact that the agent filled the proposal form without any meaningful application of mind or oversight. Such errors, if they were to be identified by the Insurer at the underwriting stage, would have been a red flag warranting further verification.
5.12. The Authority further notes the striking anomaly that the ‘Bank Details of Annuitant’ section in the proposal form recorded the bank account of Shri Venkatachalam Iyer himself, and not of his daughter, the annuitant – which directly contradicts the Insurer’s stated position that the annuity was designed to be paid to the daughter. The Insurer’s belated explanation that verification subsequently confirmed the daughter was a joint account holder is neither corroborated by the proposal documentation nor does it address the fundamental failure in the proposal processing. The preparation and acceptance of a proposal form with such material contradictions reflects a systemic failure in compliance with Clause 5 of Chapter II and Clause 12 of Chapter III of Section 2 of the Master Circular on Protection of Policyholders’ Interests, 2024. Clause 12 as mentioned supra requires that Insurers shall process the proposal form as per Board approved underwriting policy specific to the insurance product for which the proposal is submitted and ensure that the information sought in the proposal form is duly filled in and complete in all aspects, and put in place a mechanism to verify the correctness of the mobile numbers and the emails provided in the proposal form and ensure that the details provided belong to the prospect / policyholders. Similarly, the requirements of clause 5 of chapter II were not satisfied by the insurer by not carrying out the suitability analysis.
5.13. The Insurer’s claim that the benefit illustration was OTP-verified and shared with the policyholder is contradicted by the very document it submitted. The benefit illustration on record does not bear any OTP verification stamp, and the Insurer attributes this to a ‘system-related technical error’. The Authority is unable to accept a ‘system error’ as a defence for the failure to obtain the policyholder’s affirmative acknowledgement on the benefit illustration. The requirement to obtain the policyholder’s confirmation on the benefit illustration is a non-negotiable regulatory obligation under Sub-clause (c) of Clause 1 of Paragraph II of Part A of Section 1 of the Master Circular on Protection of Policyholders’ Interests, 2024. In the absence of a verifiable acknowledgement, it cannot be presumed that the policyholder was made adequately aware of the benefits.
5.14. The proposal form contained two contact numbers of the policyholder. During the personal hearing, the insurer admitted that one of the mobile number mentioned in the proposal form is not of the policyholder or of the Annuitant.
5.15. The Customer Information Sheet (CIS) and a copy of the proposal form were not provided to the policyholder at the point of sale, in violation of Clause (8) of Paragraph II of Part A of Section 1 of the Master Circular on Protection of Policyholders’ Interests, 2024. The Insurer’s submission that the policy document was dispatched electronically and physically does not substitute for compliance with the specific obligation to provide the CIS and the proposal form copy at the point of sale.
5.16. The Insurer’s defence that the collection of premium deposit on 12.02.2025, prior to policy issuance on 28.02.2025 was necessitated by the absence of an operational mechanism to block premium without actual collection is not sustainable. Clause (4) of the Proposal Stage provisions under Part A of Section 1 of the Master Circular on Protection of Policyholders’ Interests, 2024 unequivocally prohibits the collection of premium deposits along with the proposal form. The Master Circular was issued in September 2024 and was in force at the time of the transaction in February 2025. The Insurer cannot take shelter behind industry-level operational challenges or the subsequent introduction of the Bima-ASBA facility to justify non-compliance with a clear regulatory mandate that was in force for over five months prior to the transaction. Regulatory obligations are not contingent upon operational convenience, and the Authority expects regulated entities to put in place necessary systems to ensure compliance within a reasonable period of a regulatory direction being issued.
5.17. Regulation 6 (b) of Chapter I of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024 mandates that the insurer ensure that the solicitation process is transparent and incorporates built-in practices to enable fair and equitable treatment of the prospect or policyholder at all times. Regulation 7 (2) (i) further requires that the insurer put in place an appropriate framework to ensure that the features, benefits, and terms and conditions of the products being sold are represented correctly and fully. The multiple failures in this case, the deviation from product eligibility, the inadequate verification call, the hasty completion of the proposal form, the absence of suitability assessment, no clarity on recipient of annuity, no clarity on policy in-case of death of the proposer, collectively constitute a systemic failure of internal controls and oversight mechanisms on the part of the Insurer, in violation of Regulation 5(2) of the IRDAI (Corporate Governance for Insurers) Regulations, 2024.
5.18. The Insurer’s submission that the policyholder was fully aware of the product features and that the complaint was raised by a third-party relative without complete understanding cannot be accepted. The facts of the case clearly demonstrate that the policyholder was not adequately informed of material product features. Furthermore, the fact that the policyholder himself, when informed by the Insurer’s representative, opted for cancellation and a full refund speaks eloquently to the reality that the product had been mis-sold to him. The Authority also notes that the Insurer’s response to the SCN characterised the relative’s social media post as ‘unverified’ and ‘inaccurate’, and described the refund as having been given ‘notwithstanding’ the Insurer’s position that the sale was compliant. This characterisation is not only incorrect but also reflects an attitude of regulatory defiance that the Authority finds unacceptable in a regulated entity.
6. Decision
6.1. Accordingly, having regard to the nature, gravity and duration of the default and to the need to secure observance of and deter breach of the provisions effecting the interest of the policyholders, in exercise of the powers vested under Section 102 of the Insurance Act, 1938, the Authority hereby imposes a penalty of Rs. One Crore (Rs. 1,00,00,000/-) on the insurer, for the violations of
6.1.1. Regulations 6(b), 7(2)(i) and 21(7) of the IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024 and the following provisions of Master Circular on Protection of Policyholders’ Interests, 2024
i. Clause 7 of Chapter II of Section 2;
ii. Clause 2 of Chapter I of Section 2;
iii. Clause 5 of Chapter II and Clause 12 of Chapter III of Section 2;
iv. Sub-clause (c) of Clause 1 of Paragraph II of Part A of Section 1;
v. Clause (8) of Paragraph II of Part A of Section 1;
vi. Clause (4) of Paragraph II – Proposal Stage of Part A of Section 1;
vii. Clause 7.1 of Chapter II of Section 2 – all of the Master Circular on Protection of Policyholders’ Interests, 2024; and
6.1.2. Regulation 5 (2) of IRDAI (Corporate Governance for Insurers) Regulations, 2024;
6.2. Further, the Insurer is hereby advised to:
6.2.1. Undertake an immediate and comprehensive audit of all policies sold to proposers/policyholders above the age of 75 years through its corporate agent Canara Bank over the last three financial years ending on 31st March, 2026, and file a detailed report with the Authority within 90 days from the date of this Order, identifying any instances of non-compliance with product eligibility criteria, suitability norms, and disclosure obligations.
6.2.2. Review and strengthen the oversight framework governing its corporate agents, particularly with respect to adherence to approved product features, suitability analysis, and proposal form quality controls, and submit an Action Taken Report to the Authority within 90 days from the date of this Order.
6.2.3. Ensure full and effective implementation of the Bima-ASBA facility across all distribution channels without further delay, and submit a confirmation of compliance to the Authority within 30 days from the date of this Order.
7. Summary of Decisions
| Charge No. | Violation of Provisions | Decision |
|---|---|---|
| 1 | (i) Regulations 6(b), 7(2) (i), and 21(7) of IRDAI (Protection of Policyholders’ Interests, Operations and Allied Matters of Insurers) Regulations, 2024 read with the following provisions of Master Circular on Protection of Policyholders’ Interests, 2024
a. Clause 7 of Chapter II of Section 2; b. Clause 2 of Chapter I of Section 2; c. Clause 5 of Chapter II & Clause 12 of Chapter III of Section 2; d. Sub-clause (c) of Clause 1 of Para II of Part A of Section 1; e. Clause (8) of Para II of Part A of Section 1; f. Clause (4) of Para II – Proposal Stage of Part A of Section 1; g. Clause 7.1 of Chapter II of Section 2; and (ii) Regulation 5(2) of IRDAI (Corporate Governance for Insurers) Regulations, 2024; |
A penalty of Rupees One Crore (Rs. 1,00,00,000/-) and Advisory. |
The penalty amount of Rupees One Crore (Rs. 1,00,00,000/-) shall be remitted by the Insurer by debiting the shareholders account, within a period of forty-five (45) days from the date of receipt of this Order through NEFT/RTGS (details for which will be communicated separately). An intimation of such remittance shall be addressed to Shri Saket Gupta, Manager (Enforcement & Compliance) at [email protected], Insurance Regulatory and Development Authority of India, Survey No. 115/1, Financial District, Nanakramguda, Hyderabad – 500 032, with a copy to email id: [email protected].
9. Further:
9.1. This Order shall be placed before the Board of Directors of the Insurer at its upcoming Board Meeting. The Insurer shall furnish a copy of the minutes of the Board discussion on this Order to the Authority within 15 days of the said Board Meeting.
9.2. The Insurer shall submit a comprehensive Action Taken Report (ATR) to the Authority covering all directions issued under this Order within 90 days from the date of this Order.
If the Insurer feels aggrieved by this Order, an appeal may be preferred to the Securities Appellate Tribunal (SAT) as per the provisions of Section 110 of the Insurance Act, 1938.
Swaminathan Iyer
Member (Life)
Deepak Sood
Member (Non-Life)
Place: Hyderabad
Date: 10th September 2026
