Let’s Connect

Order in the matter of M/s Liberty General Insurance Co. Ltd.

The Insurance Regulatory and Development Authority of India (“IRDAI” / “Authority”) has issued an Order bearing Reference No. IRDAI/E&C/ORD/MISC/121/10/2025 dated October 30, 2025, in the matter of M/s Liberty General Insurance Co. Ltd. pursuant to the on-site inspection conducted from December 16, 2019 to December 20, 2019. The Show Cause Notice (“SCN”) dated May 21, 2024 was issued by the Authority and a personal hearing was granted to the Insurer on October 8, 2024.

The key observations and directions issued by the Authority are summarized below:

ChargeObservationDecision / Direction
1
  • CFO and COO delegated Outsourcing Committee approval powers to other officials.
  • Signed minutes of Outsourcing Committee meetings were not maintained.
  • Insurer was cautioned.
  • Ensure Outsourcing Committee minutes are properly recorded and maintained.
  • Align outsourcing policy and procedures with applicable regulations.
2
  • Complaints were incorrectly classified as service requests.
  • Only 22 complaints were reported instead of the actual 114 complaints.
  • Insurer was cautioned.
  • Ensure proper classification of complaints in accordance with IRDAI regulations.
3
  • Entered into outsourcing agreements with related parties of insurance brokers.
  • Payments were made to entities not engaged in the outsourced activities.
  • Services were allegedly used for solicitation of insurance business and excess payouts.
  • Penalty of Rs. 1 crore imposed jointly for Charge 3 and Charge 4.
  • Review vendor and intermediary agreements.
  • Carry out due diligence before outsourcing.
  • Obtain Outsourcing Committee approval.
  • Submit Action Taken Report on corrective measures.
4
  • Corporate Agents were engaged for outsourced activities such as seminars and event management.
  • Payments were booked as outsourcing expenses instead of commission/reward.
  • Payments circumvented regulatory limits on rewards.
  • Corporate Agents’ object clauses did not permit outsourced activities.
  • Covered under the Rs. 1 crore penalty imposed for Charges 3 and 4.
5
  • Payments made towards reinsurance advisory services were disclosed under operating expenses instead of commission and rewards.
  • Charge not pressed.
  • Insurer’s submissions were accepted.
6
  • Payments were made to Motor Insurance Service Providers (MISPs) towards infrastructure support and marketing charges.
  • Charge not pressed.
  • No further action since penalty had already been imposed for the related violation.

Further Directions Issued by IRDAI

  • Remit the penalty of Rs. 1 crore from shareholder funds within 45 days of receipt of the Order.
  • Place the Order before the Board of Directors in the next Board Meeting and submit the relevant Board minutes to the Authority.
  • Submit an Action Taken Report (ATR) within 90 days from the date of the Order.
  • The Insurer may file an appeal before the Securities Appellate Tribunal under Section 110 of the Insurance Act, 1938, if aggrieved by the Order.

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

Source category: IRDAI

Attachment

Comments are closed