Insurance Regulator, IRDA, imposed a penalty of Rs 5 lakhs each on six general insurers – National Insurance Company, New India Assurance Company, ICICI Lombard, IFFCO Tokio, Royal Sundaram Alliance and Bajaj Allianz General Insurance Company, for appointing various outfits of Maruti Suzuki as corporate agents in violation of Insurance regulations.
These insurers have been penalised for their failure to comply with the provisions of the IRDA (licensing of corporate agents) Regulations, 2002, while appointing group entities of Maruti Suzuki as corporate agents.
Maruti Suzuki India had formed six subsidiaries —Maruti Insurance Business Agency Ltd, Maruti Insurance Distribution Services Ltd, Maruti Agency Network Ltd, Maruti Insurance Agency Solutions Ltd, Maruti Insurance Agency Services Ltd and Maruti Insurance Agency Logistics Ltd.
Maruti Suzuki India holds 99.99 per cent equity in each of the subsidiaries and has procured corporate agency licences between 2002 and 2007 for selling policies from various general insurance companies.
As per IRDA (licensing of corporate agents) Regulations, 2002, only one licence (of the corporate agent) can be granted to one business group provided that the group doesn’t have any other insurance activity, including brokering, agency or product manufacturing.
The regulation also defines that all companies in which a single promoter group holds 10 per cent equity or more will be considered belonging to the same business group.
However, the Maruti Suzuki held 99.99 per cent stake in corporate agents under different names like Maruti Insurance Business Agency, Maruti Insurance Agency Services, Maruti Insurance Agency Logistics, Maruti Insurance Agency Solutions and Maruti Insurance Distribution Services. All these outfits of Maruti Suzuki were acting as corporate agents of the six insurance companies separately.
“The insurer(s) failed in verifying compliance by the corporate agents… of guidelines and regulations while granting and renewing the license of the corporate agent,” IRDA said in its order.
Source – irda.gov.in