Page 5 - Insurance Times March 2019

General Insurance

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Change in customer pref- Universal Sompo, chairman under IRDAI scanner
erences will boost inno- A recent inspection report by IRDAI shows that business commissions worth
crores were paid to insurance broker even when
vation in insurance sec- premium cheques submitted by them bounced.
tor: NIC CMD The inspection report, to which Sompo replied last
According to Tajinder Mukherjee, month, pertains to accounting year 2016-17, where
CMD, National 4,059 premium cheques bounced, of which, 1,124
Insurance in- belonged to a single broker, Risk Care Insurance.
creasing cus- The inspection report says the reason for the soft
tomer expec- approach against Risk Care could be "close family connections" the broking
tations has company had with ON Singh, who has been the Non-Executive Chairman of
been changing Sompo for more than a decade now.
the landscape The report says that the family members of ON Singh are shareholders and board
of general in-
members of Risk Care, which gives rise to "conflict of interest." In fact, Singh is
surance products in India. The
also a director at First Advantage Finance & Investments, which holds a 4.39
change in consumer preferences is per cent stake in Risk Care. Other shareholders of Risk Care include Singh's wife,
likely to drive product innovation in daughter, son and daughter-in law, investigations show.
the general insurance industry in
India. In addition, payments made by Sompo to other vendors, including Adept Infor-
mation Services, Mindpool Management Solutions, Krishi Care & Management
"Super flexible insurance solutions Services, Principle Security and Allied Services, too, had links with the family
such as use-based insurance and members of Singh, the report shows.
telematics-based where we can have
options such as pay as you drive or Ram Nath was a common director in both Sompo and Krishi Care, which was
pay how you drive are in the offing. paid Rs.24 crore by the insurance company. Mindpool Management, Krishi Care,
There is also increasing talks on de- and Adept Information all shared a common address at Virwani Industrial Es-
vising products that can be tate, Goregon, Mumbai. Advika International and Principle Security shared a
customised based on individual common address in Jogeshwari. Payments made to vendors include for house-
behaviour," said Mukherjee. keeping, rent, and professional charges for IT, apart from insurance. These trans-

The general insurance industry has actions are worth more than Rs.100 crore.
grown at a CAGR of nearly 13 per Sompo, in its reply, said: "The IRDAI has observed certain operational issues that
cent in the past five to six years, and were responded and clarified with due details. The company strictly follows
is currently estimated to be close to corporate governance in letter and spirit. Reasons for cheque bounces are veri-
Rs. 1,50,000 crore. Given the kind of fied by a dedicated team and system is updated for all such cases and policies
growth of the economy and sup- are cancelled and premium register and commission statement is updated.
ported by a rising middle-class popu- Necessary action is taken in all such matters. Dishonoured cheques of Risk Care
lation, the industry is likely to touch
are only around 12-14 per cent of the total other intermediaries." Sompo also
Rs. 4-lakh crore by 2025.
denied that vendors named above were parties related to Singh.
The Insurance Times, March 2019 5