Irda chief defends warning to ONGC

"We gave the benefit of doubt to ONGC because they pleaded that they were not aware of the provisions of the Act," Rao said.

"Companies can insure their assets with foreign insurers only when the assets are lying in foreign land, but they are prohibited from staying insured with foreign insurers as soon as the assets enter the country. In the case of ONGC, the MSP project assets are lying in Mumbai," he added.

According to media reports, ONGC awarded the $222-million MSP platform contract to Hyundai Heavy Industries, which is a Korea-based engineering major.

As per the contract entered by ONGC with Hyundai, it was agreed that the project would be insured in Korea. The General Insurance Act stipulates imprisonment up to one year or a fine of Rs 1,000 or both for violation of the Act.

In a letter written to ONGC chairman and managing director Subir Raha in February, Rao pointed out the contravention of the Act by the Indian and Korean partners and warned that such mistakes should not be repeated.