Insurance Regulatory and Development Authority (IRDA) chairman C.S. Rao has issued a warning to the public sector Oil and Natural Gas Corporation (ONGC) for violating provisions of the General Insurance Business (Nationalisation) Act, 1972 on their insurance cover and re-insurance arrangements for the Mumbai South Process (MSP) platform project last year.The $222-million MSP platform contract had been awarded to Hyundai Heavy Industries Ltd (HHI).As per the law, contravention of this nature involves imprisonment of up to one year or a fine of Rs 1,000 or both.In a letter dated February 11 to Oil and Natural Gas Corporation Chairman and Managing Director Subir Raha, the insurance regulatory body chief said he found that the company and its contractor HHI arranged the insurance cover with a foreign company.Rao, however, decided to let the violators go off the hook this time. He cited ‘‘importance to the nation and the fact that the principals (ONGC and HHI) have already arranged the cover’’ as reasons for ‘‘taking a lenient view and not invoking penal provisions’’.The regulator warned that ‘‘this relaxation does not constitute a precedent and cannot be taken to extend insurance cover for similar risks’’.When contacted, ONGC sources acknowledged the missive and promised not to repeat the mistake.
