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IRDAI penalizes Edelweiss Life Insurance with a ₹1 crore fine for unauthorized payments to group companies without prior approval. Learn more about the regulatory action.
The Insurance Regulatory and Development Authority of India (IRDAI) imposed a monetary penalty of ₹1 crore on Edelweiss Life Insurance in view of payments made to its group companies that were not approved by the regulator.
According to the order of IRDAI, payments to the tune of ₹13.53 crore from 2018 to 2021 were directed by Edelweiss Life towards four of its associated group companies, transactions which were considered not to be in conformity with regulatory requirements that forbid any transaction without prior approval of an insurer with respect to the related parties.
In fact, the regulator observed that the insurer did not justify payments to the group entities or show that transactions were at arm’s length or in the interest of the policyholders. Even after being given ample opportunity to explain the matter, IRDAI noted that Edelweiss Life failed to satisfactorily explain or produce documents.
Such violation, said IRDAI, could set a bad precedent in the insurance industry whose law requires transparency and regulatory oversight in financial dealings between related parties for safeguarding policyholders’ interests.
After considering the gravity of the breach involved, the Authority imposed a penalty of ₹1 crore in terms of the provisions contained under the Insurance Act. It was further directed to ensure that stricter compliance to applicable laws is observed so that better governance in its financial affairs is maintained.
This slap by IRDAI reminds all insurance companies to exercise great care and ensure strict compliance with regulatory requirements when any transactions are entered into with group entities or related parties.
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