With rampant unhealthy practices plaguing the domestic insurance industry, particularly general insurance, sector regulator Insurance Regulatory & Development Authority (Irda) has now turned the heat on some foreign insurance brokers operating in India.
The regulator has imposed a penalty of Rs 2 lakh on Marsh India, where second largest international broker Marsh holds 26% stake. An Irda official said the regulator is also investigating several other foreign brokers including Willis, the third largest international broker operating in the country. These brokers could be slapped penalties, too.
The regulator has also punished several domestic brokers by canceling their licences.
Marsh India was recently in the news for acting as a broker in the controversial Air India deal and is the first insurance broker against whom Irda has slapped a penalty. Despite being a minority stake holder, Marsh has the full management control in its Indian arm. Earlier, while investigating into the Marsh affair, Irda had refused to renew the licence of the company for a three-year term and instead had given short-term permission for three months.
Confirming the development, a top Irda official said Marsh has provided some wrong facts about its international operations which was properly investigated and proved. Marsh India has now received a three-year licence after paying the penalty.
Willis has also been refused a full three-year licence. When contacted, Marsh India CEO Sanjay Kedia was not available for comments. Sources point out that Irda is now serious about checking the unhealthy practices in the domestic general insurance industry. Some brokers with the collusion of general insurers, particularly the private sector companies, are playing a key role in tweaking rules and regulations to grab attractive deals.
?The way some of the major general reinsurance deals are being placed , only brokers are getting the benefits at the cost of the overall discipline of the industry,?? said a chief of a public sector general company.
Irda had earlier cracked whip on some state-owned general insurers and a few private insurance companies for flouting norms in several segments. It had recently penalised Rs 20 lakh against Reliance General for flouting its norms on product clearance. Other prominent insurers who have been fined earlier Rs 5 lakh include Bajaj Allianz Life Insurance, Bajaj Allianz General Insurance, Reliance General Insurance, Iffco Tokio General Insurance and United India Insurance.