IRDAI has put out a warning to Insurers, asking them to be vigilant against Insurance 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.
IRDAI has asked all companies to discuss the issue in their boardrooms. It has described the situation as a breakdown of risk management.
The letter issued this month says: “There should be regular reviews of the systems involved and in reporting relevant matters to the risk management panel (of the board) for necessary monitoring.