IRDAI fines Maruti, Hero broking firms

Isolated judicial hammer icon

Isolated judicial hammer icon  

Authority says affidavits by officers of firms ‘contrary to facts’; fines total ₹5.18 cr.

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of ₹3 crore on Maruti Insurance Broking (MIBL) and ₹2.18 crore on Hero Insurance Broking India (HIBIL) for not complying with the Motor Insurance Service Provider (MISP) guidelines.

In separate orders, the Authority directed the entities to make certain changes for compliance and improved governance.

Taking serious note of the affidavit filed by the respective Principal Officers of MIBL and HIBIL, the regulator said the affidavits were contrary to the facts. Hence, it directed the entities to not pay performance incentives to the respective Principal Officer for one year, from the date of order.

The action against MIBL and HIBIL followed the regulator deciding to call for information, from select insurance intermediaries mainly involved in selling and servicing motor insurance policies through the motor dealers. Providing the backdrop was the completion of one year since the MISP guidelines were issued.

Conflict of interest

IRDAI had also received complaints from some general insurance agents who sought to highlight the apparent conflict of interest in the role of MISPs in selling insurance policies and servicing and repairing motor vehicles. The “high claims ratio under the MISP channel, extra payments made to MISP by insurers, disparity of treatment to agents,” were cited.

The Authority also got complaints from insurance firms about insurance intermediaries have created a panel of insurers in violation of MISP guidelines.

Though separate orders, passed in the third week of December but made public recently, there were several common points, including a direction to both MIBL and HIBIL to “dismantle panel of insurers and empanel all insurers on platform, have full integration with insurers’ computer systems, ensure premiums quoted to customers come directly from insurer's systems without any intervention by the broker.”

IRDAI directed the two entities to redesign the current system of seeking customer consent for purchasing motor insurance in such a manner that the customer exercises choice of selecting the insurer through an OTP-based system at the time of issuance of a new motor insurance policy and its renewal.The regulator also wanted the entities to submit a quarterly audit report that the electronic platform/ portal complied with requirements of the MISP guidelines and in no way interferes or places restrictions in the premium to be charged by insurers or in any way restricts / influences the choice of the customer.

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Printable version | Feb 26, 2020 12:42:08 AM |

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