Insurance regulator Irdai has slapped a fine of Rs 2.18 crore on Hero Insurance Broking India for violating norms on motor insurance service providers, forcing customers to buy policies from their panel and discriminating policyholders, among others.
Irdai said it received complaints from policyholders that some of the motor insurance service providers (MISPs) sponsored by insurers, and insurance intermediaries were forcing customers to buy motor insurance policies of the insurers who are on their panel.
In its order against Hero Insurance Broking India Ltd (HIBIL), Irdai said it received complaints from some general insurance agents association of the apparent conflict of interest in the role of MISPs in selling insurance policies and servicing and repairing motor vehicles under the insurance policies sold by it, high claims ratio under the MISP channel, extra payments made to MISP by insurers, and disparity of treatment to agents, among others.
"The Authority also received complaints from insurers that insurance intermediaries have created panel of insurers which is in violation of Guidelines on Motor lnsurance Service Providers," the regulator said in an order.
Irdai, in its order, clarified that neither the insurance broker nor the MISP can create such a panel of insurers for selling motor insurance policies. It also added that no MISP or the insurance intermediary can enter into an agreement with an original equipment manufacturer (OEM) which has an influence or bearing on the sale of motor insurance policies.
The levy of penalties on the insurance broker has come after off-site inspection and giving the broker chance for personal hearing.
"Based on above decisions in charge... Hero Insurance Broking India Pvt Ltd., is hereby directed to pay a penalty of Rs 2,18,00,000," the Insurance Regulatory and Development Authority of India (Irdai) said in its order.
Hero Insurance Broking is one of the biggest insurance brokers covering 2-wheeler in the country and, therefore, is a leader in this field, Irdai observed.
"This places tremendous responsibility on HIBIL as it is held as the torch bearer of the broking profession. ln light of such expectations, HIBIL was expected to act diligently and with utmost care and responsibility. Unfortunately, HIBIL failed in complying with the MISP guidelines which had been created to protect the interest of the policyholders and other stakeholders," Irdai said.
It further asked the broker to dismantle the panel of insurers and empanel all insurers on its platform, redesign current system of seeking customer consent for purchasing insurance policy so that the customer can exercise choice of selecting the insurer, among others, and asked it to submit a report to Irdai.