Insurance Regulatory and Development Authority of India (IRDAI) has cancelled the licence of SB Insurance Brokers with immediate effect after the latter violated norms, reported local publication Moneycontrol.com. According to IRDAI's decision, it was not in the interest of policyholders or the insurer to permit the broker to continue operations in the market.

IRDAI took the decision after allegations surfaced that the broker’s tele-callers identified themselves as members of an insurance company rather than SB Insurance Brokers. When the broker was asked to respond to these allegations by the regulator, its reply was said to have implied that it was raising questions on the regulation prescribing that every broker has to identify himself to the client.

Commenting on this issue in its order, IRDAI said, “The reply further attempts to justify the action 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.”

On its website, SB Insurance Brokers claims to have worked with major insurers such as HDFC Life Insurance, Future Generali Life Insurance, Bajaj Allianz Life Insurance, Reliance Nippon Life Insurance and SBI General Insurance. Even though its license has been cancelled, the broker has to service its established contracts for a period of six months. During that time period, it has to arrange for another licensed insurance broker to service its contracts subsequently.

SB Insurance Brokers made a submission to IRDAI stating that it would unable to continue its business. However, IRDAI has clarified that the decision behind the cancellation of the broker’s license is not motivated by this submission and instead is a response to the violation of regulations.