The Insurance Regulatory and Development Authority of India (IRDAI) fined Reliance General Insurance Company ₹1 crore for violating regulations pertaining to outsourcing, commission payments, and corporate governance guidelines.

One of the infractions involves hiring an individual agent of another insurer for advertising and publishing services. “There was no transparency or clear rationale regarding how the agent was selected for this role… the insurer failed to justify their decision to engage the agent and make substantial payments,” the insurance regulator wrote in the December 26 verdict.

In its verdict on four counts, the IRDAI stated that the insurer’s payments were effectively overriding commissions disguised as market awareness programmes, advertising efforts, and customer awareness initiatives to dodge laws.

The insurer has exposed itself to increased outsourcing risk and has failed to demonstrate that suitable internal controls have been implemented under Clause 6 of the Guidelines for Corporate Governance for Insurers in India, according to the report. The order is based on an IRDAI remote inspection of the insurer from December 27 to 31, 2021, which identified certain infractions of the Insurance Act of 1938.