Insurance regulator IRDA on Friday imposed a fine of Rs 5 lakh each on six general insurance companies including Cooperative giant, IFFCO-Tokio for appointing various outfits of Maruti Suzuki as corporate agents in violation of sector regulations.
These insurance companies have been penalized for their failure to comply with the provisions of the Insurance Act while appointing group entities of Maruti Suzuki as corporate agents.
As per the insurance regulation, a promoter of corporate agency is not allowed to hold more than 10 per cent stake in another corporate agency.
However, the Maruti Suzuki held 99.99 per cent stake in corporate agents under different names like Maruti Insurance Business Agency, Maruti Insurance Agency Services, Maruti Insurance Agency Logistics, Maruti Insurance Agency Solutions and Maruti Insurance Distribution Services.
All these outfits of Maruti Suzuki were acting as corporate agents of the six insurance companies separately.
“The insurer(s) failed in verifying compliance by the corporate agents… of guidelines and regulations while granting and renewing the license of the corporate agent,” IRDA said in its order.
During the course of hearing IRDA also rejected the contention of insurers to consider arrangement with Maruti Insurance as a “special case” and condone the oversight by them.