The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a monetary penalty of ₹1 crore on Edelweiss Life Insurance Company. The fine stems from violations of corporate governance norms, particularly concerning outsourcing practices and regulatory reporting failures.
According to the official order issued by IRDAI, the insurance company failed to correctly classify certain transactions as outsourced services, a move that contravenes existing IRDAI Outsourcing Regulations.
Regulator Orders Overhaul of Policies and Reporting Mechanisms
Along with the penalty, IRDAI has instructed Edelweiss Life Insurance to classify relevant transactions as outsourcing under applicable norms and submit the updated details to the Authority. The regulator emphasized that proper categorization is not only a compliance requirement but also critical for maintaining operational transparency and risk oversight.
The insurance provider has also been directed to establish a comprehensive outsourcing policy, approved by its Board of Directors. This policy must include provisions for periodic review to ensure that it remains aligned with evolving regulatory standards and risk environments.
Focus on Vendor Oversight and Cost Transparency
In a significant governance tightening move, IRDAI has further asked the insurer to implement a vendor management policy. This should be accompanied by a clear standard operating procedure (SOP) on cost allocations, ensuring financial prudence and accountability in vendor relationships.
The regulator’s actions reflect its broader efforts to strengthen governance frameworks across India’s insurance sector and to prevent potential risks stemming from mismanaged outsourcing arrangements.
Edelweiss Life Insurance has not yet released an official statement in response to the penalty or directives but is expected to align its internal processes as per the Authority’s latest guidelines.
