The Indian arm of the world’s third-largest reinsurance broker, Willis, is under the insurance regulator’s scanner in two cases, resulting in a delay in renewing of its licence.
The Insurance Regulatory & Development Authority (Irda) had issued a showcause notice to the broker on two issues. One was on a transaction between the state-owned export credit insurer, ECGC, and Willis’ promoter Bhaichand Amoluk Consultancy, in which the latter rejected the claim. Bhaichand is both majority shareholder and promoter of Willis India. Under foreign investment rules, Willis’ holding in the Indian venture was capped at 26 per cent.
The second matter pertains to an aircraft insurance policy taken by the Rajasthan government. Irda is holding out on renewing the broker’s licence till both matters are resolved to its satisfaction. The licence lapsed in April last year and was given a year’s extension. Brokers have to renew their licences every three years and usually apply two months before the licence lapses.
Due process on
Willis’ representative in India, Mitul Vohra, said the renewal was under process. He did not discuss the notice. The ECGC issue goes back to 2000, when the Indian promoter of the broker rejected a claim of around Rs 3.8 crore. Last year, ECGC asked the insurance regulator to take action against the broker. Both parties subsequently settled the matter.
“As far as the matter pertaining to ECGC is concerned, we have resolved it. We have informed the regulator about the settlement. Now, it is for the regulator to take whatever action it wants,” said ECGC Executive Director S Prabhakaran.
The issue involving the Rajasthan government pertains to a two-year-old transaction in which the broker denied having placed any risk for the aircraft.
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A senior Irda official said the showcause notice was served two months earlier. The regulator had given the broker an opportunity to present its case. “The hearing took place two days back. We are examining the matter and the proceedings are under process. After all issues are settled, their licence will be renewed,” said an official.
He added that despite the matter having been settled between ECGC and the broker, Irda would like to study the broker’s record before renewing the licence. “It is important to study their settlement records to take any further action. It is a big loss for the client if his claim is settled after 10 years,” he added.