Insurance broker running RenewBuy.com fined Rs 1 crore by IRDAI. Here’s why

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a penalty of Rs 1 crore on D2C Insurance Broking Pvt Ltd for appointing agents and canvassers to bring in the insurance business. The insurance broker was also found guilty of having a website (renewbuy.com) with a different name and was warned for the same.

The insurance broker was accused of using the brand name “renewbuy” for soliciting insurance online without “visibly and clearly displaying the Broker’s name on the website.” The regulator found this to be violating Para 1 of Schedule VII under Regulation 22 of IRDA (Insurance Brokers Regulations,) 2013. As per this regulation, a website developed by an insurance broker should carry its name as licensed by the authority. The usage of any other name of linkage to another website is prohibited.

Case history

The IRDAI had conducted an on-site inspection of the broker from 22-03-2017 to 24-03-2017 and sought a reply on its finding from the broker on 20-11-2017. The reply was received on 28-12-2017. The regulator issued a show-cause notice on 18-10-2019. The broker replied to the notice on 10-11-2019.

IRDAI hearing and decision

The broker submitted that its name, license number, the name of the principal officer and the licence certificate were made available under the “About Us” section of the RenewBuy.Com website. It also claimed to have informed the regulator about the domain name of their website as “renewbuy.com” through a letter dated 23-12-2014.

The IRDAI in its decision said that the “Broker was using a website carrying the name “renewbuy” for soliciting insurance business without visibly and clearly displaying Broker’s name on the said website.” However, the broker could not submit any communication from the regulator which exempted it from complying with the regulatory provision. Also on the availability of relevant details on the “About Us” page of renewbuy.com, the regulator said the same was not visible from the homepage of the website during the inspection.

“The above indicates that the broker has knowingly failed to comply with the regulatory requirement and the Broker is warned for the same,” IRDAI said in its decision dated 29th June 2021.

Rs 1 crore fine

The IRDAI found that the insurance broker had “either engaged their promotor company M/S D2C Consulting Pvt Ltd. who used their own employees for canvassing insurance for the Broker or engaged other entities e.g. BizConnect, Bersavi India Pvt. Ltd. etc. (through their promoter company) who employed canvassers/agents using a mobile app viz. renewbuy partners.”

However, the regulator said in its order that the broker employed agents or canvassers to bring in business in collusion with the promoter company M/S D2C Consulting Pvt Ltd. The broker also acknowledged during the personal hearing that it had engaged various unlicensed individuals and entities through M/S D2C Consulting Pvt. Ltd. for bringing business and soliciting insurance business.

As per the IRDAI decision, the broker was guilty of violating Para 3(b) of Schedule VI-A under Regulation 28 of IRDA (Insurance Brokers) Regulations 2013 from the year 2015-16 till the date of inspection. This regulation mandates that “Every insurance Broker shall confirm that he doesn’t employ agents or canvassers to bring in business.”

The authority imposed a penalty of Rs 1 crore on the broker for violation of Schedule VI-A under Regulation 28 of IRDA (Insurance Brokers) Regulations 2013. The IRDAI also warned the insurance broker for not having two qualified persons to solicit the insurance business.

IRDAI has allowed the broker to appeal to Securities Appellate Tribunal if it feels “aggrieved by any of the decisions in this order.”

Source: Financial Express