New Delhi. The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹1 crore penalty on Canara HSBC Life Insurance Company Limited for selling an insurance policy to an 88-year-old senior citizen. The regulator’s examination found several deficiencies related to product eligibility, customer suitability, solicitation and verification processes, disclosure of essential information and internal controls. The company subsequently refunded the customer’s entire premium of ₹4.09 lakh.
The matter relates to the sale of a deferred annuity policy. The case came to IRDAI’s notice following a social media post, after which the regulator took suo motu cognizance and examined the sale and related procedures. The policy carried an annual premium of ₹2 lakh and had a four-year premium-paying term. It was sold through Canara Bank, which was acting as the insurer’s corporate agent. The customer’s daughter was shown as the annuitant in the policy documents.
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The most significant lapse identified during the examination was that the approved product had a maximum entry age of 80 years, while the proposer was 88. Despite this, the policy was sold. The regulator found that, considering the customer’s advanced age and the substantial premium commitment, an adequate assessment of his financial position and the suitability of the product had not been undertaken.
IRDAI also identified deficiencies in the verification process carried out during solicitation. Adequate safeguards were not followed while verifying information relating to the policy’s features and benefits. The benefit illustration did not contain a verifiable acknowledgement from the policyholder, making it difficult to establish that the customer had understood and accepted the information provided.
According to the regulator, the Customer Information Sheet and proposal form were not provided to the customer at the point of sale. The premium was also collected before the policy was issued. In addition, the consequences of the proposer’s death during the premium-paying period were not adequately disclosed.
IRDAI treated the deficiencies collectively as significant failures in the overall sales and policy issuance process. According to the regulator, the company failed to adhere to the approved product features, adequately assess customer suitability, follow proper solicitation and verification procedures, complete the proposal process correctly and provide essential information. The lapses were considered instances of mis-selling and inadequate protection of the policyholder’s interests.
After the matter came to light, the company met the policyholder. At the customer’s request, it refunded the entire premium amount of ₹4.09 lakh, including the second-year premium. The related commission was also reversed. The company also informed the regulator about several corrective measures taken following the incident.
As part of these corrective measures, the company revised its product brochure, policy documents and customer suitability assessment framework. It also introduced pre-issuance video-based validation calls to strengthen verification of the customer’s identity, understanding and consent before a policy is issued.
IRDAI imposed the ₹1 crore penalty under Section 102 of the Insurance Act, 1938. In addition, the regulator directed the company to conduct a comprehensive audit of policies sold through Canara Bank to proposers or policyholders above 75 years of age. The audit is intended to determine whether similar deficiencies relating to product eligibility, suitability or solicitation occurred in other policies sold to senior citizens.
The regulator has also directed the company to strengthen oversight of corporate agents and ensure full implementation of the Bima-ASBA facility across distribution channels. The action highlights the regulator’s strict approach toward the sale of insurance products to senior citizens and the need to carefully assess their age, financial capacity, requirements and suitability before selling them insurance products.
About the author — Suvedita Nath is a science student with a growing interest in cybercrime and digital safety. She writes on online activity, cyber threats, and technology-driven risks. Her work focuses on clarity, accuracy, and public awareness.
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