The IRDAI (“Authority”) issued an order in the matter of M/s. Acko General Insurance Ltd. (“Insurer”) Vide order bearing reference number IRDAI/E&C/ORD/MISC/68/05/2025 dated May 19, 2025 (“Order”), with respect to the Show Cause Notice dated July 10, 2024 issued by the Authority in connection with remote inspection conducted, and submission made by the insurer during Personal Hearing dated October 03, 2024 and further submission made vide email dated October 10, 2024.
The observations raised by the Authority and decisions on these observations are summarized hereunder for reference:
Charge
Violation
Observation of the Authority
Decision of the Authority
1.1
Violation of Section 40(1) of Insurance Act, 1938 which reads as under:
Section 40(1):
‘No person shall, pay or contract to pay any remuneration or reward, whether by way of commission or otherwise for soliciting or procuring insurance business in India to any person except an insurance agent or an intermediary or insurance intermediary in such manner as may be specified by the regulations.’
The Authority observed that the insurer has entered into an arrangement with Ola Financial Services Pvt. Ltd. (OFSPL) under the API agreement just to pass excess payments which in turn is not permitted by the Regulations. OFSPL is recognised to issue prepaid instruments but lacks infrastructural services for issuance of insurance policies or advertising.
Penalty:
The Authority imposed a penalty of ₹1,00,00,000/- (Rupees One Crore only) on the insurer.
Warning and Advisory:
The Authority advised the Board of insurer to put in place a comprehensive policy on Outsourcing in accordance with the Regulations.
1.2
Violation of Regulation 15(d) of IRDAI (Outsourcing of Activities by Indian Insurers) Regulation, 2017 the excerpt is as under:
Reg. 15(d)
‘Insurers shall ensure that in respect of all the activities outsourced to the related parties or group entities of the Insurer or related parties or group entities of Insurance Intermediaries; the consideration amount agreed upon and modifications thereon, if any, shall be subject to specific approval of the Outsourcing Committee of the Insurer.’
The Authority observed that the insurer failed to establish that any approval has been taken from the Outsourcing Committee before engaging such entity and also there is failure to establish that deliberation of the Outsourcing Committee is done on the cost-benefit analysis.
1.3
Violation of Regulation 21 of IRDAI (Outsourcing of Activities by Indian Insurers) Regulation, 2017 which reads as under:
Reg. 21
‘Insurers shall report all the outsourcing arrangements where annual pay-out either per outsourcing service provider or per activity is One Crore rupees or more, every year within 45 days from the close of the financial year. The format for reporting is given in Annexure III.
Notwithstanding the above threshold for periodic reporting, the Authority may call for details, cause inspection in respect of any outsourcing arrangements.’
The Authority observed a conflict of interest, as the arrangement benefits the corporate agent. The insurer failed to conduct proper due diligence and monitoring of the outsourced service provider and services. The insurer fails to submit any relevant documents showcase that the approval process have been followed by them for engaging the services of OFSPL.
Additionally, the insurer also did not file outsourcing returns for OFSPL with the Authority
1.4
Violation of Regulation 6(c) of IRDAI (Payment of Commission of Remuneration or Reward to Insurance Agents and Insurance Intermediaries) Regulation, 2016, which reads as under:
Reg. 6(c)
‘No reward shall be paid to an insurance intermediary whose revenues from other than insurance intermediation activities is more than fifty per cent of their total revenue from all the activities.’
The Authority observed that the payments made under the agreement for advertisement with Corporate Agent, are more than the limits prescribed. It suggests an indirect payment of rewards for soliciting insurance policies.
The Authority has also directed the insurer to:
- Remit the penalty by debiting the Account of the Shareholder of penalty of Rupees one crore (₹1,00,00,000/-) within a period of 45 days from the date of receipt of this order through RTGS/NEFT.
Remit the penalty by debiting the Account of the Shareholder of penalty of Rupees one crore (₹1,00,00,000/-) within a period of 45 days from the date of receipt of this order through RTGS/NEFT.
- Intimate the remittance to Shri T. Venkateswara Rao, General Manager (Enforcement and Compliance) at the Insurance Regulatory and Development Authority of India, Survey No.115/1, Financial District, Nanakramguda, Hyderabad 500032, email id enforcement@irdai.gov.in .
Intimate the remittance to Shri T. Venkateswara Rao, General Manager (Enforcement and Compliance) at the Insurance Regulatory and Development Authority of India, Survey No.115/1, Financial District, Nanakramguda, Hyderabad 500032, email id enforcement@irdai.gov.in .
- To place this particular order in the upcoming Board meeting and provide a copy of minutes of discussion.
To place this particular order in the upcoming Board meeting and provide a copy of minutes of discussion.
- Submit an Action Taken Report within 90 days from the date of Order.
Submit an Action Taken Report within 90 days from the date of Order.
- File an appeal if the insurer feels aggrieved by any of the decisions in this order before the Securities Appellate Tribunal as per Section 110 of the Insurance Act, 1938.
File an appeal if the insurer feels aggrieved by any of the decisions in this order before the Securities Appellate Tribunal as per Section 110 of the Insurance Act, 1938.
A copy of the Order is attached for your ready reference.
Source category: IRDAI
Attachments
- /2025/492_2025-05-21_IRDAI_Order_in_the_matter_of_M_s_Acko_General_Insurance_Ltd__Dated19-05-2025.pdf
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