Insurance regulator IRDA has imposed a penalty of Rs 5 lakh each on two life insurers,state-run Life Insurance Corporation (LIC) and HDFC Life Insurance,for failing to meet rural and social sector obligation in 2008-09,Parliament was informed on Friday.
The Insurance Regulatory and Development Authority (IRDA) has imposed a fine on LIC and HDFC Standard Life Insurance for non-compliance under the rural sector target during 2008-09,Finance Minister Pranab Mukherjee told the Lok Sabha.
Against the target of 25 per cent,LIC missed it by a whisker and could only underwrite 24.27 per cent of policies in the rural sector,he said.
At the same time,HDFC Standard Life achieved just 12.85 per cent against the target of 19 per cent,he said.
“As per the Insurance Regulatory and Development Authority (Obligation of Insurers to Rural or Social Sectors) Regulations,2002 as amended in 2007 the insurance companies are required to achieve the prescribed percentage of their policies in case of life insurers and of premium income in case of non-life insurers in the rural sector in the respective year of their operations in India,” he said.
To another question,Minister of State for Finance Namo Narain Meena said the public sector general insurance companies have been incurring health insurance claims in excess of premium received and after factoring in acquisition costs,which are around 10 per cent,and the management expenses which are over 25 per cent,the combined ratio that is the total expenses for health portfolio exceed 140 per cent of the premium income.
In an effort to rationalise the health insurance portfolio and provide health care at an affordable cost and at the same time help the insurer control increasing cost of health care,the public sector general insurance companies have initiated the process to create a Preferred Provider Network (PPN) of hospitals in fours cities,he said.
Theses cities include Delhi,Mumbai,Chennai and Bangalore. At present the PPN network include a network of 449 hospitals (Delhi-163,Mumbai-121,Chennai-84 and Bangalore 81) and more hospitals are joining the network,he added.
Replying to another question,Meena said the airline industry has been pointing out to the government the constraints that are being faced by them.
The Indian Banks’ Association has taken up the matter with the Reserve Bank of India,he said.