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The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹1 crore on Reliance General Insurance Company for violations of provisions related to insurance intermediaries, outsourcing of activities and corporate governance norms.
The penalty follows a remote inspection conducted by the regulator between December 27 and 31, 2021. Based on the inspection findings, IRDAI issued a show-cause notice to the insurer on November 29, 2024.
The company submitted its responses in January 2025 and made further representations during a personal hearing held on March 5, 2025.
In its order dated December 26, 2025, IRDAI said the inspection revealed multiple instances where payments made by the insurer were not in compliance with regulatory requirements. These included payments to related parties of insurance brokers, an individual insurance agent associated with another insurer, an unlicensed entity, and certain corporate agents.
According to the regulator, the insurer classified several activities as advertising and consumer awareness programmes, while IRDAI concluded that these activities fell within the scope of outsourcing under applicable regulations. The authority observed that the insurer failed to undertake required due diligence, cost-benefit analysis, conflict-of-interest checks, and approvals by the outsourcing committee in several cases.
IRDAI also noted that some payments were not reported under outsourcing returns despite exceeding prescribed thresholds, thereby avoiding regulatory scrutiny. The authority concluded that certain payouts amounted to unauthorised or overriding commissions disguised as marketing or awareness activities.
The penalty has been imposed under Section 102 of the Insurance Act, 1938, for violations of the IRDAI (Insurance Brokers) Regulations, 2018; IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Intermediaries) Regulations, 2016; IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017; and the Guidelines on Corporate Governance for Insurers.
IRDAI has directed Reliance General Insurance to remit the penalty within 45 days from receipt of the order, place the order before its board, and submit an action taken report within 90 days. The insurer has the option to appeal the order before the Securities Appellate Tribunal under the Insurance Act.
The penalty follows a remote inspection conducted by the regulator between December 27 and 31, 2021. Based on the inspection findings, IRDAI issued a show-cause notice to the insurer on November 29, 2024.
The company submitted its responses in January 2025 and made further representations during a personal hearing held on March 5, 2025.
In its order dated December 26, 2025, IRDAI said the inspection revealed multiple instances where payments made by the insurer were not in compliance with regulatory requirements. These included payments to related parties of insurance brokers, an individual insurance agent associated with another insurer, an unlicensed entity, and certain corporate agents.
According to the regulator, the insurer classified several activities as advertising and consumer awareness programmes, while IRDAI concluded that these activities fell within the scope of outsourcing under applicable regulations. The authority observed that the insurer failed to undertake required due diligence, cost-benefit analysis, conflict-of-interest checks, and approvals by the outsourcing committee in several cases.
IRDAI also noted that some payments were not reported under outsourcing returns despite exceeding prescribed thresholds, thereby avoiding regulatory scrutiny. The authority concluded that certain payouts amounted to unauthorised or overriding commissions disguised as marketing or awareness activities.
The penalty has been imposed under Section 102 of the Insurance Act, 1938, for violations of the IRDAI (Insurance Brokers) Regulations, 2018; IRDAI (Payment of Commission or Remuneration or Reward to Insurance Agents and Intermediaries) Regulations, 2016; IRDAI (Outsourcing of Activities by Indian Insurers) Regulations, 2017; and the Guidelines on Corporate Governance for Insurers.
IRDAI has directed Reliance General Insurance to remit the penalty within 45 days from receipt of the order, place the order before its board, and submit an action taken report within 90 days. The insurer has the option to appeal the order before the Securities Appellate Tribunal under the Insurance Act.
