IRDAI Imposes ₹1 Crore Penalty on ICICI Lombard

Key facts

• The Insurance Regulatory and Development Authority of India (IRDAI) imposed a ₹1 crore penalty on ICICI Lombard General Insurance for lapses in outsourcing practices, vendor management and corporate governance.
• The penalty was imposed following an inspection of ICICI Lombard conducted in 2019.
• The penalty relates to payments made by the insurer under the head 'sales marketing and business support'.
• ICICI Lombard stated that of the ₹709.57 crore it incurred under the 'sales marketing and business support' head during FY19, about ₹35-37 crore was paid to individual agents of other insurers.
• IRDAI found that the insurer used agents of other insurers for event management activities without adequate supporting documents.
• The insurer failed to classify the event management activities as outsourced or report them in its outsourcing returns.
• In its September 7 order, IRDAI held that by not classifying event management services as outsourced activity, the insurer failed to report these expenses in the Outsourcing Returns, thereby avoiding timely regulatory scrutiny.