The licence was cancelled due to allegations of misrepresentations to customers by the insurance broking firm.
Insurance Regulatory and Development Authority of India (IRDAI) has cancelled the licence of SB Insurance Brokers. The regulator in its decision said that it was not in the interest of policyholders or the insurer to permit this broking company to continue operations in the market.
The decision was taken by the insurance regulator in response to allegations of spurious calls being made, broker representing an insurance company rather than customers.
In the list of charges, IRDAI has stated that the broker was asked to respond to allegations of the broker's tele-callers identifying themselves as members of an insurance company rather than SB Insurance Brokers.
However, the regulator said that the tenor and rhyme of the reply of the broker suggested that the entity was attempting to question the regulatory prescription that every broker has to identify himself to the client.
of their personnel claiming themselves to be speaking from the office of the insurer. But both the arguments of the broker are untenable and cannot stand the scrutiny of law and regulations because of the fact that the customer is misled and is placed at a disadvantageous position," said IRDAI in its order.
The licence has been cancelled with immediate effect.
On the other hand, the broking firm had also made a submission to IRDAI that they would unable to continue their business.
However, IRDAI clarified that the decision to cancel their licence is made to the violations of the norms and is not guided by the broker's intention not to pursue their business.
SB Insurance Brokers, however, has to service the contracts already concluded through them for a period of six months within which they have to make suitable arrangements for having the contracts attended to by another licensed insurance broker.
"This order is issued for the purpose of taking to logical end the regulatory action initiated against the broker in regard to the violations emerging out of theinspection conducted on the broker," said IRDAI.
As per law, the broking firm can file an appeal with the Securities Appellate Tribunal against the IRDAI order.Subscribe to Moneycontrol Pro and gain access to curated markets data, exclusive trading recommendations, independent equity analysis, actionable investment ideas, nuanced takes on macro, corporate and policy actions, practical insights from market gurus and much more.
