Insurance Broker Fined Rs 1 Crore

According to IRDAI, Marsh India had held the premium received from the clients in an Insurance Bank Account for more than 15 days and did not remit the premium to the insurer/reinsurer within the time limit of 15 days.

The Indian insurance regulator, the Insurance Regulatory and Development Authority of India (IRDAI), has penalised leading insurance broker Marsh India Insurance Brokers Pvt Ltd with a fine of Rs 1 crore for certain violations of provisions of the Insurance Act, 1938 and Regulations and Guidelines issued thereunder.

According to IRDAI, Marsh India had held the premium received from the clients in an Insurance Bank Account for more than 15 days and did not remit the premium to the insurer/reinsurer within the time limit of 15 days.

Between the financial years 2018-2019 and 2020-2021, Marsh India did not remit the premium within the stipulated time in 826 cases involving an amount of Rs 12,53,41,45,627, the IRDAI order notes.

The IRDAI had said in some cases, the delay in remittance of premium was observed to be more than 900 days.

As per the IRDAI regulations, insurance brokers shall take steps to promptly remit premiums/claims received to reinsurers/insurers/foreign insurance brokers, but not later than by fifteen days or as specified in the Terms of Business Agreement (TOBA) from the date of receipt of the monies into their Insurance Bank Account.

'Any delay in remittance shall be informed to the reinsurer/insurer/foreign insurance broker and shall take their written consent for such delay,' the order notes.

IRDAI has also ordered Marsh India to undertake a review of all pending remittances and file an action taken report including the status of pending remittances as on 30-09-2024 within 90 days.

As per the IRDAI order, Marsh India should review internal controls and identify deficiencies in processes and draw an action plan to ensure that issues are addressed and corrective actions are implemented to bring average delay with mandated Turn Around Times as per Regulations.

Marsh India in its submission to the show cause notice received from IRDAI said that the insurers have shown reluctance in signing the TOBAs explicitly, therefore their implied or deemed consent is taken as approval for TOBA as long as they continue to take the services of the broker.

Venkatachari Jagannathan can be reached at
venkatacharijagannathan@gmail.com

Feature Presentation: Ashish Narsale/Rediff.com