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IRDAI Order on the matter of Marsh India Insurance Brokers Pvt Ltd.

IRDAI vide Order bearing reference number: IRDAI/E&C/ORD/MISC/124/09/2024 dated September 06, 2024, issued an Order in the matter of M/s Marsh India Insurance Brokers Pvt Ltd. (“Broker”) with respect to the Show Cause Notice (“SCN”) dated January 30, 2024, issued by the Authority in connection with on-site inspection conducted by the Authority from 10th to 18th January 2022.

The observations/ issues raised by the Authority and decisions on these observations are summarized hereunder for reference:

Sl. No.ViolationObservations of AuthorityDecision of Authority
1

Charge No. 1



Violation of Clause (f) of Schedule II-Form U under Regulation 33(2) of IRDAI (Insurance Brokers) Regulations, 2018:



“The insurance money collected by the registered insurance broker shall be dealt with in the following manner:



(f) he 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 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.”

Broker has failed to improve the systems even after five years from the date of issuance of the erstwhile Advisory for delay in remittance of amounts, as far as the remittance of monies/premium is concerned.



A Re-Insurance Broker is not expected to sit on monies which are due to the reinsurers beyond a reasonable time.



The delay in remittance is evidence of operational inefficiency and also failure to comply with Schedule II-Form U (f) of IRDAI (Insurance Brokers) Regulations, 2018.

The Authority exercised the power vested under Section 102(b) of the Insurance Act, 1938 and levied a penalty of:



Rs. 1 Crore (Rupees One Crore only)



The Board of the Broker was directed to:



  1. Undertake a review of all pending remittances and file an action taken report including status of pending remittances as on 30-09-2024.
  2. Review internal controls, identify deficiencies in processes and prepare an action plan to ensure corrective actions are implemented.
  3. Bring average delay within mandated Turn Around Times as per Regulations.

 

Further Directions:

  1. Remit the penalty amount of Rs. 1,00,00,000/- (Rupees One Crore) within 45 days from receipt of this Order.
  2. Send intimation of remittance to Shri T. Venkateswara Rao, General Manager (E & C), IRDAI.
  3. Place this Order before the Board of the Broker at its upcoming meeting and provide a copy of minutes of discussion.
  4. Submit an Action Taken Report to the Authority within 90 days from the date of this Order.
  5. If aggrieved by this Order, an appeal may be preferred to the Securities Appellate Tribunal, Mumbai as per Section 110 of the Insurance Act, 1938.

A copy of the Order is attached for your ready reference.

Source category: IRDAI

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