Let’s Connect

Order in the matter of Deinon Risk Services Private Limited

IRDAI has issued an Order bearing reference no IRDAI/INT/ORD/MISC/103/05/2022 dated May 25, 2022 in the matter of Deinon Risk Services Private Limited ( Deinon ), basis show cause issued pertaining to violation of section 42D(8) of the Insurance Act, 1938 ( Act ) and submissions of the Deinon.

Background:

IRDAI received an email dated June 15, 2020 from Corporate Insurance Cell of Reliance Industries Ltd ( Reliance ), seeking the registration status of Deinon & M/s PIIQ Risk Partners (PIIQ), stating that they had been approached by Deinon vide email dated June 3, 2020 for offering services in respect of aviation insurance business.

An explanation was sought vide letter dated July 14, 2020 from Deinon as to the basis for offering “Aerospace (Re)Insurance Services” to Reliance since the entity was not registered with IRDAI for offering aforementioned services.

The charge, submissions of reply thereof of Deinon and decision of the Authority are summarized as follows:

Charge & Violation

Deinons submission

Decision

Charge:

Violation of Section 42D(8) of the Insurance Act, 1938

Deinon had violated Section 42D(8) of the Act by acting in the capacity of insurance intermediary without being registered with the Authority, to act as such.

Deinon submitted that:

  • The objective was to provide business support services including business analytics, valuations, risk evaluation, insuretech solutions to insurers
  • They discontinued any idea or plan of business support services on receipt of letter of the Authority dated July 14, 2020
  • The promoters opted to venture into the broking business for solicitation of insurance product and accordingly filed an application to register “Deinon Insurance Brokers Private Limited” with the ROC on September 7, 2020
  • They also provided a CA certificate certifying that they have neither raised any invoice nor received any amount towards brokerage or fees from their clients on account of any insurance broking activity or services.
  • That they disagreed with Authority’s assessment that the present case is similar to Confiance International Reinsurance Brokers LLC and Unison Insurance Brokers Services Private Limited and there was no involvement of Deinon in any aspect of the placement other than an e-mail content.
  • That they had no intention to engage in such activities and has never falsely represented themselves as an Insurance Intermediary.
  • That the observations have been taken with great seriousness and have been adhered to with no debate or dispute. That they did not agree that the observations constitute any intent to function as an Insurance broker and certainly, no business was intended or transpired.
  • That the observations had resulted in imposing the maximum possible penalty under the law despite no revenue being earned by the Company from the above-mentioned activities. Also, it resulted in the Authority not granting an NOC to incorporate Deinon Insurance Brokers Private Limited as an insurance broker.

Penalty

  • It was observed from Deinon’s correspondence with insurers that their role was not limited to business support/risk consultancy and Deinon was playing an active part in foreign inward reinsurance placements.
  • The correspondence with insurers in a few cases clearly construes that the official of the Deinon were approaching to insurer on behalf of their principal (PIIQ) for placement of business. Therefore, it was admitted by Deinon’s own submission that they performed the functions of an insurance broker.
  • Deinon has accordingly observed to have performed the functions of a Reinsurance broker without any registration with the Authority

IRDAI has levied a penalty of Rs. 10,00,000 (Rupees Ten Lakh only) after taking into consideration all the facts, circumstances, material available on the records and findings of the Adjudicating officer.

IRDAI has directed Deinon:

  • To remit the penalty of Rs. 10,00,000/- within a period of 30 days from the date of receipt of the Order.
  • To approach the Securities Appellate Tribunal if Deinon feels aggrieved by the Order.

Source category: IRDAI

Attachments

  • /2022/90_2022-09-30_Order_in_the_matter_of_Deinon_Risk_Services_Private_Limited.pdf

Comments are closed