Government could tighten IRDAI service rules

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The government is reviewing the insurance regulator’s service rules to avoid further conflicts of interest after the second president in four years took a top job in the private sector immediately after stepping down, two people told the stream of evolution.

The move follows a complaint to the government over the appointment of former Indian Insurance Regulatory and Development Authority (IRDAI) chairman Subhash Chandra Khuntia as part-time chairman of Jana Small Finance Bank, which also sells insurance products from private insurers as a corporate agent. .

Former President TS Vijayan came under the control of the Ministry of Finance after accepting the post of director of Yes Bank in 2018 without obtaining government approval.

The bank was at the time a corporate officer of insurance companies, including Max Life and Reliance General Insurance, which were directly regulated by IRDAI.

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In accordance with Article 8 of the IRDA Act, the President and full-time members of IRDAI may not hold government employment or work for an insurance company for a period of two years from the date on which they cease to hold the position of regulator, without prior authorisation. of the central government.

The question currently under consideration is whether there is a gap, such as an insurance business in a non-insurance organization, conducted as a peripheral business. The government can consider whether the ban on employment should be extended to these businesses, where there is potential for conflict of interest and “revolving door” phenomena.

“Section 8 of the IRDA Act is very clear that the appointment of a former regular insurer shall not be in any government entity or insurance company for a period of two years without government approval. . Jana Small Finance Bank is an RBI regulated bank and not an insurance company. So there is no conflict of interest or violation of rules and no prior approval from the Ministry of Finance is required in this case,” Khuntia told TSWT by phone when asked about the honoring his appointment to the bank immediately upon leaving the office of IRDAI President.

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Questions sent by mail to the Ministry of Finance and the Secretariat of the Department of Financial Services remained unanswered until the time of going to press. Messages left on the Financial Services Secretary’s phone were also unanswered.

“The service receives various complaints on issues related to aspects of appointment or vigilance. All complaints are investigated and action is taken in accordance with applicable regulations,” the people quoted above said.

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“Rather than an individual case, the question should be considered from a regulatory point of view – whether a bank involved as an insurance agent, regulated by IRDAI, should be considered a company involved in the activities insurance,” they added.

Khuntia retired from IRDAI in May last year and took up the post at Jana Small Finance Bank in October. The bank sells general insurance products from Bajaj Allianz General Insurance Co. Ltd. & ICICI Lombard General.

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