Irdai warns domestic insurers against 'shadow capital' from rogue brokers

The warning comes after the regulator received several whistle-blower complaints in the past two months against more than one of the top insurance brokers

India’s insurance regulator has put out a warning to domestic insurance companies, asking them to be vigilant against rogue brokers offering fraud reinsurance cover from overseas. The warning has become necessary as brokers are tapping into cash-strapped domestic insurers to provide them ‘shadow capital’ to expand their business. 

The Insurance Regulatory and Development Authority of India (Irdai) is so worried that it has asked all companies to discuss the topic in their boardrooms. It has described the situation as a breakdown of risk management, the very basis on which insurance companies run their business. 

Too many broker firms have popped