IRDA suspends broker for "improper conduct" in Ranbaxy case

IRDA has for the first time in four years suspended licence of a broker for "improper conduct" while reinsuring assets of Ranbaxy.

Insurance regulator IRDA has for the first time in four years suspended licence of a broker -- Corporate Risks India Pvt Ltd for "improper conduct" while reinsuring assets of pharma major Ranbaxy Laboratories.

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The regulator has appointed its deputy director Arup Chatterjee to probe the case along with similar cases that may be brought to the notice of IRDA, and submit a report within six weeks.

The move follows a complaint in relation to placement of reinsurance liability risks of Ranbaxy Ltd.

IRDA has asked for an explanation from the broker before suspending its licence.

"The explanation provided by Corporate Risks India in response to this complaint is not satisfactory and there is sufficient reason to believe that the insurance broker has acted improperly on technical issues as well as in matters relating to due diligence and truthful conduct of business," IRDA member Mathew Verghese said in a circular.

IRDA has directed Corporate Risks India to suspend all broking activities from March 27 till the enquiry is completed and a decision on the report of the enquiry officer obtained.

This is perhaps the first case when the regulator has taken such a harsh step after the opening of the sector for brokers and private insurers.