Context:
The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹1 crore penalty on Edelweiss Life Insurance Company for violations related to outsourcing norms and customer onboarding practices, flagging serious lapses in corporate governance and regulatory compliance.
Outsourcing Violations
- IRDAI found that Edelweiss Life failed to manage conflicts of interest while outsourcing key functions.
- Insurers are mandated to:
- Conduct due diligence of service providers.
- Ensure compliance with regulatory obligations.
- Establish systems, policies, and procedures to avoid conflicts of interest.
Failure in Capturing Bank Details
- Edelweiss Life did not collect bank account details at the proposal stage for policyholders paying premiums above ₹10,000.
- The company argued that capturing such details was not required — a contention rejected by IRDAI.
- Directive issued: All proposer/insured bank details must be collected during proposal itself.
