TATA INSURANCE BROKERS

SUB : HUMILIATING THE INSTITUTION OF PARLIAMENT BY CHAIRMAN IRDA TO FAVOUR A PARTICULAR INDUSTRIAL HOUSE.

I would like to bring to your kind attention that Insurance Regulatory and Development Authority has issued a Memorandum Ref : 063/IRDA/Memo/07-08 dated 18.3.08. I also enclose a letter received through a very reliable source giving how the Chairman of the IRDA is trying to push forward the application of Tata Group for grant of insurance broking license before his retirement so that he can take up Directorship in one of the Tata Group Companies and in his eagerness to achieve that evil purpose how he is giving go bye to the established precedents and trampling the internal working of the Authority. He has promised to the Tata’s to grant them the insurance broking license in return for monetary and other considerations. The reason behind this is that an application which was rejected twice by himself was decided to be at a time when the Chairman is reaching retirement. Definitely what proof is being put to you will prove that in an attempt to please the Tata bosses, the Chairman has violated not only the established rules and regulations of the Authority but also violated the sanctity, right and privileges of the Indian Parliament which is the Supreme Body representing the Heart and Soul of this Great Country.

At first glance, a reading of this Memorandum will not reveal anything except looking like an innocent and concerned communication stating that Authority is worried about the entry of corporate houses promoting insurance broking companies in addition to doing broking business. But a reading of the first letter and then this Memorandum makes it crystal clear the whole idea behind issuance of this Memorandum and the reasons for by passing the Members of the Insurance Advisory Committee. Not only the very application of the group was rejected twice earlier but also other corporate houses were refused similar license on the ground of ‘conflict of interest’ and ‘ benefit of the insurance industry’. Now with this two documents it is anybody’s guess that where this interest or benefit of industry have gone.

I list out some of the changes being intended through this Memorandum intended to nullify and make ineffective the provisions of Brokers Regulations, 2002 :

Memorandum dated the 18th January 2008 was issued by the IRDA. In the said Memorandum vide clause ( C ) (vi) reads

"The broker shall ensure that not more than 25% of the insurances handled by it in any financial year is placed with the insurance company within the promoter group separately for life and for general insurance business. The broker shall establish internal machinery to monitor this on an ongoing basis"

Whereas the Regulation 20 of IRDA (Insurance Brokers) Regulations, 2002 reads as under :

"The business of the insurance broker shall be carried in such a manner that not more than 50% of the premium (quantum receipts, etc. as the case may be ) in the first year of business, 40% of the premium in the 2nd year of business, and 30% of the premium from the 3rd year of business onwards shall emanate from any one client"


Is the above para/clause of the memorandum not in contravention of Regulation 20 of IRDA (Insurance Brokers) Regulations, 2002 ? Certainly yes.

A reading of both the paras makes it clear that the Broker Regulations (A Gazetted document) a copy of which is placed before the Hon'ble Parliament, does not permit to do business beyond 30% of the premium from 3rd year onwards, how the Authority reduced that percentage from 30 to 25 in this Memorandum dated 18.3.08. Is it not amounting to circumventing of the letter and spirit behind this clause which prevented monopolization/cartelization of the business into a select few hands.

You as Hon’ble Members of the both the Houses of Indian Parliament has to stop this assault on the sovereignty of the Indian Parliament. Sir, I request you to kindly order a enquiry into the whole affairs to know the truth. This issue must be referred to the Privileges and Ethics Committee to examine and see whether the Chairman has committed impropriety and unconducted himself in an unprofessional manner. He should be hauled up for his acts and deeds. Sir, the time available at our disposal is very limited as this gentleman is retiring in the month of May, 2008 and you as responsible Members of Parliament has to act very fast so that he cannot succeed in his evil and unethical desires.

Sir, with great difficulty I have managed to arrange these papers which I am forwarding you. I know the Chairman of the IRDA is a very powerful and influential person from IAS fraternity and he can get away from anything. The livelihood of lakhs of agents are at stake because of his greed for money and position and the fate of the insurance industry as a whole is also being threatened.