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Title: FINAL ORDER
Reference No.: IRDA/HLT/MISC/ORD/194/10/2016
Date: 07/10/2016
In the matter of M/s United India Insurance Co. Ltd.
Based on the Notice to Show Cause issued vide letter Ref. No.193/IRDAI/GEN/HLT/UII-Misc/2015-16 dated 22.02.2016, in the matter of non-filing of two products: (1) Cancomfort Insurance Policy & (2) TMB Uni Mahila Family Floater Health Insurance,
Notice to Show Cause (SCN) dated 22nd February 2016 on observed deviations committed by M/s United India Insurance Co. Ltd. (the Insurer / UII) was issued and in deference to the Insurer’s request, a personal hearing was accorded on 25.07.2016 at 02.30 PM at the office of the Insurance Regulatory and Development Authority of India, Hyderabad.
The Insurer was represented by Mr. A Hoda, Chairman cum Managing Director (O), Mr. Ish Kumar, General Manager, Mr. C R Vijayan, General Manager, Mr. Y K Shimray, DGM (Chief Compliance Officer), Mr. N Mohan Sankar, Chief Manager (Bancassurance Dept), Mr. Rabindranath Nayak, Chief Manager (Compliance Dept), Mr. D Bhairavnath, Manager. On behalf of the Authority Ms Yegnapriya Bharath, JD (Health), Mr. D V S Ramesh, Deputy Director (Health-Policy), Mr D P Pattanaik, OSD (Health-Products) and Ms K Naga Nalini, OSD (Health-Products) were present in the personal hearing.
The products (1) Cancomfort Insurance Policy & (2) TMB Uni Mahila Family Floater Health Insurance were filed by the insurer on certification basis under regulation 17(b)(i) of IRDA (Health Insurance) Regulations, 2013 (hereafter referred as HIR, 2013) vide letter dated 25.03.2015. The said regulation is applicable to the then existing products approved / cleared by the Authority prior to the notification of HIR, 2013. However, the Insurer could not furnish the date of earlier filing or approval of the said products with supporting documents.
The submissions made by the Insurer vide their letter HO:COMPLINPANCE: 2016 dated 25th February 2016 to the issues raised in the SCN and those made during the course of the personal hearing were taken into account.
The findings on the explanations offered by the Insurer to the Show Cause Notice and the decisions thereon are as follows.
1. Charge No. 1
As per the declaration dated 10.09.2015 from CMD of the Company, the product ‘Camcomfort Insurance Policy’ was launched in the year 2005.
As per Circular No. IRDA/GEN/FUP/VER 1.0/DEC.2000, dated 06-12-2000, 2(1) Every insurer, at the time of introducing a new product, shall file an application for such product with the Authority and use the product for sale in the market, subject to the requirements set out in para 4.
However, the Insurer could not furnish the date of filing/approval of the above product.
Reply of the Insurer
In response, Insurer submitted that Cancomfort insurance policy was being marketed since 1992 by one of the public sector general insurance companies to credit card holders of Canara Bank, a public sector bank. The same policy had to be continued by UII in the interest of the continuity of coverage to customers of Canara Bank and as desired by the bank for seamless servicing and also keeping in view the protection of the policy holders’ interest. As per extant regulations 2005, there was no requirement of detailed filing in the manner laid down by File and Use guidelines issued in September 2006 to be effective after 1st November 2006. Following Authority’s circular dated 11th February 2015, it was filed for approval under BAP Process on 31.3.2016.
The Insurer further submitted that ‘Cancomfort Insurance Policy’ is a package policy which has components of House Holders and Personal Accident in addition to Health insurance and non filing of the above product was unintentional since inception on 1.11.2005, and can reasonably be attributed to lack of understanding that it might attract HIR provisions. The non-continuance of the Cancomfort policy with the same terms and conditions of the previous insurer would have adversely affected the interest of large number of policy holders who have been enjoying the benefits under the policy, which was not an encouraging proposition.
Decision:
The submissions of the Insurer that the product under reference has been in market since 1992, which was only continued by the Insurer are considered. However, it is clarified that as per Circular No. IRDA/GEN/FUP/VER 1.0/DEC.2000, dated 06-12-2000, 2(1) Every insurer, at the time of introducing a new product, shall file an application for such product with the Authority and use the product for sale in the market, subject to the requirements set out in para 4. And as per clause (8) of Circular No. 021/IRDA/F&U/SEP-06 dated 28th September 2006, Guidelines on ‘File and Use’ requirements for General Insurance Products:
(8) Products, which were filed under the earlier file and use guidelines, need not be re-filed under the present guidelines unless the insurer has made any changes in the rates, terms or conditions of cover of such products. If an insurer has packaged a product with several different covers, any change in terms and conditions of the package such as deletion of some of the covers or the premium reduction for such deletion, will require to be filed under this procedure unless the insurer has filed with the original file and use filing, the option to delete some of the packaged covers and indicated the premium reduction for such deletion and there are no subsisting queries.
With the said regulatory framework which is already put in place, it is important for the Insurer to ensure compliance before marketing any product.
However, taking into consideration the submissions of the Insurer that the product was offered to continue the coverage to the customers and for seamless service, the Insurer is cautioned for not complying with the within referred regulatory framework while continuing the coverage under ‘Cancomfort Insurance Policy’. The Insurer is also directed to strictly adhere to the extant applicable regulatory provisions of product filing before marketing any product hereafter.
2. Charge No. 2
As per the declaration dated 10.09.2015 by CMD of the Company, the product ‘TMB Uni Mahila Family Floater Health Insurance’ was launched on 21.06.2014.
As per Regulation 4(a) of IRDA (Health Insurance) Regulations 2013, “No health insurance product shall be marketed by any insurer unless it has the prior clearance of the Authority accorded as per the File and Use Procedure”.
However, the Insurer could not furnish the date of filing/approval of the above product.
Reply of the Insurer
In response, Insurer submitted that ‘TMB UNI Mahila Family Flaoter Health Insurance’ is akin to RSBY scheme already filed with the Authority and issued to women account holders of Tamilnad Mercantile Bank on 25th June 2014. The product was again filed on certification basis on 10th September 2015. The Insurer has now filed the product under BAP process on 25.02.2016.
The Insurer further submitted that non-filing of the product offered to women account holders of Tamilnad Mercantile Bank was an unintentional lapse on their part and requested to condone the same as it was filed on certification basis and also under BAP process on the above dates.
Decision:
The submissions of the Insurer that the product offered to women account holders of Tamilnad Merchantile Bank is on lines of RSBY product that was already filed with the Authority are considered. However, as per Regulation 4(a) of IRDA (Health Insurance) Regulations 2013,
4(a) “No health insurance product shall be marketed by any insurer unless it has the prior clearance of the Authority accorded as per the File and Use Procedure”.
4(b) Any subsequent revision or modification of any approved health insurance product shall also require the prior clearance of the Authority as per the guidelines issued from time to time.
It is further clarified that RSBY was filed by the Insurer as a scheme devised by the Central Government and to be launched in the states with the help of certain State Governments. The scheme was to be marketed directly to BPL workers and their families in unroganized sector. Whereas this product was marketed under another brand name ‘TMB UNI Mahila Family Floater Health Insurance’ to women account holders of Tamilnad Mercantile Bank without seeking prior approval of the Authority, which is not in order.
However, on considering the submissions of the Insurer that the said product is same as ‘RSBY’, which was already filed with the Authority under Use and File Procedure, the Insurer is cautioned for not following the regulatory framework stipulated herein.
The Insurer is directed to strictly adhere to the extant applicable regulatory provisions of product filing before marketing any product hereafter.
Insurer is directed to submit a compliance report in respect of all the directions issued under this order within 15 days from the date of this order.
Place: Hyderabad
Date: 04.10.2016 Member (Non-Life)
