IRDA refuses to renew old venture’s licence
Global broker Willis plans to appeal last week’s decision by India’s Insurance Regulatory & Development Authority (IRDA) not to renew the broking licence for its Indian joint venture, Willis India Insurance Brokers. It is also terminating its relationship with joint venture partner Bhaichand Amoluk Consultancy Services Pvt. Ltd. (BACSPL) and seeking a new partner.
“Willis is taking decisive action to find the best solution to seamlessly transition its Indian business and staff to a new joint venture with an established and highly respected organisation in India,” the broker said in a statement.
The broker said it is in “advanced contractual discussions” with a new partner but declined to name the firm. It added that it will work closely with IRDA to obtain the necessary approvals and facilitate an orderly transition of its business, clients and employees to the new veture.
Willis holds a 26% stake in Willis India Insurance Brokers, the maximum that a foreign entity is allowed to own in an Indian business, while the remaining 74% is held by BACSPL.
IRDA refused to renew Willis India Insurance Brokers’ licence after it found that it had “clearly failed to adhere to the applicable and relevant regulations while carrying out the activities as an insurance broker and has acted in a manner prejudicial to the interests of the policyholders.”
Among the concerns raised by IRDA were that the broker failed to disclose a complaint from the Export Credit Guarantee Corporation (ECGC) of India that BACSPL had wrongfully withheld funds, and the fact that the joint venture’s principal offer had acted on behalf of BACSPL, rather than the joint venture itself, during the dispute with ECGC. IRDA also alleges that that the broker failed to properly maintain the ‘insurance bank account’ used for payment to reinsurers and ceding companies.
“Willis is extremely concerned about the IRDA findings against its joint venture partner, Bhaichand Amoluk Consultancy Services Pvt. Ltd., which holds a 74 percent stake in Willis India,” the Willis statement reads. “Willis announced today that it is in the process of terminating its current relationship with Bhaichand Amoluk as a result of a series of management differences.”
Willis said Willis India, the retail broking operation, employs 100 people in nine offices across India. In addition, Willis Processing Services, the company’s global operations centre in Mumbai and a separate business entity to Willis India, has grown to 1,300 employees since its formation 18 years ago.
“Willis has been in India for nearly two decades and in that time has established a reputation for excellence, integrity and transparency. We are therefore appealing the IRDA’s decision that it is disinclined to renew the licence of Willis India, and are working with them to ensure the well-being of our clients and staff in the process,” said Andrew Hicks, managing director of Willis India.
He added: “Willis remains entirely committed to India, one of the most significant and fastest-growing insurance markets in the world, and to protecting the interests of our clients, policyholders and staff who support our global brand in a country with a growing population of more than 1.1 billion people.”