General insurance companies ICICI Lombard, IFFCO Tokio, Royal Sundaram, Bajaj Allianz, New India Assurance and National Insurance failed to comply with the guidelines laid down by the Insurance Regulatory and Development Authority (IRDA).
These six insurance companies had granted licenses to five group entities belonging to the same promoter entity M/s Maruti Suzuki India Ltd group, to act as corporate agents on their behalf.
Corporate agent means a company or firm which holds a license to act as an insurance agent for a life insurer and a general insurer. As per rule, a firm or company can sell the products of only one Life Insurance Company and General Insurance Company at a time.
The insurance regulator received information that Maruti Suzuki India Ltd holds 99.99% stake in five other group entities Maruti Insurance Distribution Services Ltd, Maruti Agency Network Ltd, Maruti Insurance Agency Services, Maruti Insurance Agency Logistics Ltd and Maruti Insurance Agency Solutions Ltd. These five group entities were also acting as corporate agents of other insurance companies.
These six insurance companies failed to verify compliance of these corporate agents while granting as well as renewing license. They failed to exercise due diligence in renewal of the license and did not obtain complete information from the corporate agent about insurance related activities of any of the members of the group they belong to.
Insurance companies are not allowed to violate rules either knowingly or unknowingly. All the six insurance companies have therefore been slapped with a fine of Rs 5 lakh each for flouting the rules laid down by the regulator.