IRDA drafts stricter regulations to stop insurance agents from selling ponzi plans

With the bust of the Saradha scam,  the Insurance Regulatory Development Authority has come out with more stringent guidelines to prevent them from marketing ponzi schemes. 

The guidelines state  that both individual as well as corporate agents would have to submit written undertakings of having no association with private entities involved in the business of accepting public deposits. The stricture should be applicable to both public and private insurance companies as well as general and life insurance firms. 

According to IRDA sources, the authority will shortly ask insurance companies under its authority to collect the written undertakings from their regular and corporate agents. The Saradha scam has brought into the forefront that a good number of insurance agents associated with the country’s biggest insurance firm Life Insurance Corporation of India, had doubled  up as collection agents of different chit fund companies, including that of the tainted Saradha Group.

It was also evident that such incidences were rampant mainly in West Bengal, Assam, Bihar, Jharkhand and Orissa, where the activities of such ponzi schemes were the highest.