The Insurance Regulatory and Development Authority of India (Irdai) has penalised agents and brokers for their involvement in a Rs 300-crore fraudulent crop reinsurance deal as they cheated Tata AIG General Insurance, The Indian Express reported.
The Insurance Regulatory and Development Authority of India (Irdai) has penalised Unison Insurance Broking Services, Confiance, a Malaysia-based broker and Global Master Consultant (GMC) for their involvement in a Rs 300-crore fraudulent crop reinsurance deal as they cheated Tata AIG General Insurance, The Indian Express reported. Citing an order issued last week, the report also said that a member at IRDAI, Sujay Banarji has barred Confiance MD, Steven Chetty from doing any kind of insurance business in India due to his primary role played in the fraudulent deal. Further, Sachin Agarwal and Mukesh Ranwan, Directors of GMC representing Confiance in India have also been forbidden from doing business in insurance/ reinsurance, not just in India but from their overseas office also.
According to the report, the primary broker for Tata AIG General Insurance, Unison Brokers has been fined Rs 1 crore for their participation in the fraud. Tata AIG had made a complaint to IRDAI against Unison Insurance Broking Services earlier in December 2019 alleging fraud in reinsurance placement pertaining to crop insurance. The company has written an email to the insurance regulator stating that the Baroda-based broker has made “facultative reinsurance arrangements to support the company’s crop reinsurance risk cover in 2018-19.”
“Confiance had provided the terms for placement with two reinsurers, Tokio Marine Kiln Syndicate (TMK) and Best Meridian Insurance (BMI) and the insurance placement was confirmed with copies of signed slips of the participating reinsurers. The broker remitted the reinsurance premium of Rs 1.13 crore and Rs 6.17 crore, respectively, to Confiance,” the report added.
After the company deducted its brokerage in November 2018, officials at Tata AIG realised that TMK is not participating in the facultative placement of its crop business. Upon contact, it was confirmed that TMK has not supported the reinsurance and while the slips appeared by to signed by TMK, they were issued by it. BMI too accepted that they have not signed, quoted or executed any reinsurance involving Tata AIG. As a result, fraudulent slips were exposed. IRDAI said that the actions of Confiance were ‘deliberate and harmful’ further mentioning that actions like these cannot be tolerated under any circumstances as they put general insurance companies in distress. Meanwhile, “Confiance made no efforts to clarify its stance and simply returned the premium, which, in turn, proves that it intentionally committed this act by not placing the risk with the foreign reinsurers and issued forged reinsurance slips to the Indian reinsurance broker,” the report said.