IRDA cancels Corporate Agency License of M/s. Abira Insurance Services Ltd, a group concern of Golden Trust Financial Services due to violation of rules and regulation of IRDA
ORDER OF THE INSURANCE REGULATORY AND DEVELOPMENT AUTHORITY IN RESPECT OF M/S. ABIRA INSURANCE SERVICES LIMITED
1. M/s Abira Insurance services Ltd. (herein after referred to as â€˜the Corporate Agentâ€™) was granted a license bearing number 2498927 on 20th July,2006 to act as a corporate agent of M/s Max New York Life Insurance Co. Ltd. (hereinafter referred to as â€˜the insurer), for a period of three years.
The said license was renewed in the year 2009 for a further period of three years and hence valid upto 19.07.2012. In terms thereof, the Corporate Agent was subject to the terms and conditions of the license issued to it and was also required to abide by the relevant provisions of the Insurance Act, 1938 (hereinafter referred to as â€˜the Actâ€™), the Insurance Regulatory and Development Authority Act, 1999 (hereinafter referred to as â€˜the IRDA Act, 1999), the Insurance Regulatory and Development Authority (Licensing of Corporate Agents) Regulations, 2002 (hereinafter referred to as â€˜the Regulationsâ€™) and other directions issued by the Authority from time to time by way of circulars and/or guidelines particularly, Circular No. 017/IRDA/Circular/CA Guidelines/2005 dated 14th July 2005 (hereinafter referred to as â€˜the Guidelines).
2. By virtue of powers vested in the Authority under section 14 (2) (h) of the IRDA Act, 1999 the Authority has conducted an On Site Inspection of the corporate agent at its office at Kolkata on 29th February 2008. Based on the findings of the inspection report, the Authority issued a notice to Show Cause vide letters dated 11th November,2009 & 9th April,2011 to the corporate agent.
Responses dated 30th November, 2009 and 29th April, 2011 were received from the corporate agent to the above referred show cause notices. Vide Show cause notice dated 9th April, 2011 and the Authorityâ€™s letter dated 22.12.2011, the corporate agent was advised whether they desire to have an opportunity of personal hearing. However vide reply dated 24.12.2011 the corporate agent did not seek opportunity of being heard. Hence it has been decided to proceed on the basis of material available on record.The following decisions have been taken on each of the charges:-
i) Charge 1: Corporate Agency License bearing no. 1416667 was granted to Golden Trust Financial Services by LIC of India on 06/10/2006 which was valid upto 05/10/2009.The same set of individual belonging to M/s Golden Trust Group have floated Abira Insurance Services Ltd and obtained another corporate agency license bearing no.2498927 on 20.07.2009 from Max New York Life Insurance Co.Ltd. without disclosing about insurance related activities of any of the members of its group. This amounts to violation of Clause 5 of Guidelines on Licensing of Corporate Agents issued vide Circular No.017/IRDA/Circular/CA Guidelines/2005 dated 14th July, 2005.
Decision:The corporate agent has denied the charges and stated that Abira Insurance Services is having an independent and distinct identity without belonging to any group and exclusively engaged in distribution of insurance products of the Insurer. On examination of the inspection observation, reply of the corporate agent, and other related documents it is observed that the following three corporate agency licenses have been obtained from LIC & MNYL.
Mr.Babaesh Majumdar is promoter of the entity at Sl.No.1 above and holding 89% share in the said entity. The major shareholder in the entity at S.No.3 is Mrs. Abira Majumdar D/o Babesh Majumdar. Her stake in the said entity is 79.72%. Hence in terms of Clause 5 of Guidelines, the above two entities are regarded as being in same group. The Corporate Agent hasobtained second license within its group without disclosing the insurance related activities of the members of the group
Further, it is also observed that the entity at Sl.No.2 has obtained a corporate agency license which was valid upto 12.08.2006. The following three persons were partners in the said entity:-
a. Ms. Abira Majumdar
b. Mr.Amitava Sengupta
c. Mr.Subrata Majumdar
All the above listed three persons areshareholders in M/s Abira Insurance Services which was granted a license mentioned at Sl.3 of above table by the same insurer on 20.07.2006. In view of this the corporate agent has knowingly obtained second license within the group by circumventing the provisions of Clause 5 of the Guidelines.
ii) Charge 2:It is observed that the following specified persons of corporate agent were also holding similar position with another corporate agent namely, Golden Trust Financial Services Ltd.
Mr.Arup Ranjan Poddar, Mr.Chandan Jash, Mr.Siddartha Roy, Mr.Rakesh Kumar, Mr.Amit Karak, Ms.Susanta Pal, Mr.Partha Sarathi Saha, Mr.Rajarshi GuhaMallik, Mr.HarshnathJha andMr.SandipSarkar. This is in violation ofRegulation 9(2)(iv) of IRDA (Licensing of Corporate Agents) Regulations,2002, which specifically bars Specified Persons from holding similar position with another Corporate Agent.
Decision:The corporate agent has admitted that nine persons mentioned above were engaged as SPâ€™s while they were acting as SPâ€™s of GTFS. They denied the engagement of Mr. Partha Sarathi as their SP.Â
In view of this,the corporate agent has violated provisions of Regulation 9(2)(iv)and Regulation 9(1) (a) of IRDA (Licensing of Corporate Agents) Regulations, 2002.
iii) Charge 3:Clause 3.3 of Corporate Agency agreement requires the Corporate Agent to keep insurer informed regarding the profile of CIE and Sales Executives at the time of hiring. It has been observed that Mr. Rizwan Ahmed who is the CIE of M/s ABIRA Insurance Services Ltd (of Kolkata) is also found as CIE of NOVA Financial Services (of Lucknow).This is in violation of Regulation 9(2)(iv) of IRDA (Licensing of Corporate Agents) Regulations, 2002 and Regulation 9(1) (a) of IRDA (Licensing of Corporate Agents) Regulations,2002.
Decision; The corporate agent submitted that they had no information about his association with NOVA Financial Services. As per the database available with the Authority it is evident that Mr.Rizwan Ahmed acted as CIE of M/s Nova Financial Services, corporate agent of TATA AIG Life vide license no.1623962.It is pertinent to mention here that in terms of Cl.7 of guidelines dated 14.07.2005 the CIE shall be the whole time employee of the corporate agent. In view of this the person referred above is construed to be whole time employee of Abira and GTFS Ltd during his common tenure as CIE of both the entities.
Therefore, it is clear that the corporate agent did not have control on the activities of CIE, which amounts to violation of Regulation 9(2)(iv)and Regulation 9(1) (a) of IRDA (Licensing of Corporate Agents) Regulations,2002.
iv) Charge 4:The corporate agent has not submitted the following documents to the inspection team despite repeated requests.
a. Copy of minutes of board meeting in which appointment of CIE is finalized.
b. Original set of annual records filed with ROC
Decision:Thecorporate agent has submitted that as there was no request from the inspection team, they had not furnished the same. Since there is no written record of such request by inspection team in the file,it is decided to drop this charge.
v) Charge 5:It is observed that the corporate agent is operating from 16, Ne S B Mansion, RN Mukherjee Road which is different from the present registered address i.e.p-12,CIT Rd.3rd Floor, Kolkata.
Decision: The corporate agent denied the charge and submitted that their registered address as p-12, CIT Road,3rd Floor,Kolkata-14.As per the inspection report, the team first visited the office located at 16, RN Mukherjee Road which is a multi-storied building housing different entities of Golden group. The team met Mr. Rizwan Ahmed CIE of corporate agent there. Further it is also mentioned in inspection report that the corporate agent had effected change of address to P-12, CIT Road. The team had visited this office and found that no administrative activity was carried out in that office. However the charges are not pressed since a specific violation has not been established.
3. Taking cognizance of the gravity of the charges at (1),(2) & (3) above and on a judicious exercise of the powers vested in the Authority under Section 14(1) of the IRDA Act, 1999 and section 42(5) of the Insurance Act, 1938, read with Regulation),11(b), 11(c),of IRDA (Licensing of corporate agents) Regulations, 2002, the license bearing No.2498927 granted to M/s Abira Insurance Services is cancelled with immediate effect. The corporate agent is hereby ordered along with insurer with whom it is attached to, to make necessary arrangements for servicing of insurance policies earlier serviced/being serviced by it, under intimation to the Authority.