IRDAI Fines Canara HSBC Life ₹1 Crore Over Mis-Selling to 88-Year-Old
IRDAI has fined Canara HSBC Life Insurance ₹1 crore for selling an age-ineligible policy to an 88-year-old customer.
IRDAI cracks down on insurance mis-selling by imposing a ₹1 crore penalty on Canara HSBC Life.
IRDAI: The Insurance Regulatory and Development Authority of India (IRDAI) on September 10 imposed a penalty of Rs 1 crore on Canara HSBC Life Insurance Company Limited following enforcement proceedings into the mis-selling of a life insurance policy to an 88-year-old senior citizen.
The regulator said that the action stems from the sale of a deferred annuity policy carrying an annual premium of Rs 2 lakh and a four-year premium-paying term. The policy was sold through the insurer’s corporate agent, Canara Bank, to the 88-year-old customer, with his daughter named as the annuitant. IRDAI said it took suo-motu cognizance of the matter after a social media post drew attention to the sale, following which it sought explanations from the insurer.
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IRDAI: Entry Age Breach and Disclosure Gaps
On examining the case, IRDAI’s Competent Authority found that the approved product permitted an entry age of 30 to 80 years, while the proposer was 88 years old at the time of sale — eight years above the product’s upper age limit. The regulator also found that adequate suitability and financial assessment had not been carried out despite the customer’s advanced age and the size of the premium commitment.
The order cited further deficiencies across the sales process, including gaps in the verification call, the proposal form, and disclosure of policy features. IRDAI noted that the benefit illustration lacked verifiable acknowledgement by the policyholder, and that the Customer Information Sheet and a copy of the proposal form were not provided to the customer at the point of sale. The regulator also found that premium had been collected before the policy was issued, and that the consequences of the proposer’s death during the premium-paying term had not been adequately disclosed to him.
Taken together, the Competent Authority held that these lapses amounted to failures in adherence to approved product features, suitability assessment, solicitation and verification, proposal processing, disclosure, and internal controls — constituting mis-selling and inadequate protection of the policyholder.
IRDAI: Insurer Refunds Premium, Faces Directions on Audit and Oversight
After the matter came to its notice, Canara HSBC Life Insurance met the policyholder and, at his request, refunded the full premium of Rs 4.09 lakh — which included the second-year premium — and reversed the commission paid on the policy. The insurer also told the regulator it had undertaken corrective measures, including revising its product brochure, policy document and suitability assessment framework, and introducing pre-issuance video-based validation calls.
After considering the facts and the insurer’s submissions, IRDAI imposed the Rs 1 crore penalty under Section 102 of the Insurance Act, 1938, citing 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.
Beyond the monetary penalty, the Competent Authority directed Canara HSBC Life Insurance to conduct a comprehensive audit of all policies sold to proposers and policyholders above 75 years of age through Canara Bank, and to strengthen its oversight framework governing corporate agents. The insurer has also been directed to ensure full and effective implementation of the Bima-ASBA facility across all its distribution channels.
IRDAI further directed the insurer to place the order before its Board and to submit an Action Taken Report within the stipulated period.
In its press release, IRDAI said it remains committed to policyholder protection, fair and transparent solicitation, product suitability, and governance and accountability across the insurance sector, and that it will continue to take supervisory and enforcement action wherever regulatory violations are observed.
