Insurance Regulatory and Development Authority of India (Irdai) chairman Subhash Chandra Khuntia on Thursday expressed concern over the practice among motor insurance service providers to offer commissions higher than the amount stipulated by the regulator.
“Whenever it is coming to our notice, we are taking action. We have also done some focused inspection of some of the service providers. We are watching the market very carefully for some violations,’’ he said, adding that some insurers are incentivising car dealers in violation of motor insurance service providers (MISP) guidelines.
“They should not do so as Irdai is watching them,’’ he said, addressing reporters on the sidelines of an event organised by the Insurance Brokers Association on Thursday. It is alleged that several private sector players are paying higher illegal commission while insuring the private cars in the own damage segment. This is higher than the permitted amount as fixed by Irdai.
Khuntia also said that insurance companies will have to make provisions for their exposure to the crippled infra lender IL&FS. The IL&FS group, with a debt of over Rs 94,000 crore, has been defaulting on its financial obligations since August and has also borrowed from insurance companies, even though the exact exposure of the industry is not immediately known.
“As the exposure to IL&FS cannot be written off, they will have to make provisions,” Khuntia said without offering any specifics.
The Irdai chief also asked insurance industry intermediaries to ensure that their conduct is ethical and pitched for self-regulation in this aspect.