Toyota Tsusho lnsurance Broker or TTIBIL has sold about 7.06 lakh motor insurance policies to
3.16 lakh Toyota car owners and 3.90 lakh Yamaha owners.
In an order issued on 8 January 2020, Sujay Banarji, member for distribution at IRDAI, says, "TTIBIL is a significant broker in the selling and distribution of motor insurance in the country. It is part of the Toyota Kirloskar Motor Pvt Ltd (TKM) having strong presence in motor vehicle segment. By not getting the best terms, benefits, coverages for the customer TTIBIL has not conducted its dealing with clients with utmost good faith and integrity, nor has it acted with care and diligence thereby violating the conduct in matters relating to clients relationship."
IRDAI says it had received complaints from policyholders, general lnsurance agents association and insurers about apparent conflict of interest in the role of TTIBIL in forcing motor customers to buy insurance for the insurers on their panel. The complainants also alleged that TTIBIL has kept the uniform premium rates for same motor vehicles from all its seven insurers and been discriminating between insurance policyholder, who has bought motor insurance from that motor dealer as against who has not bought from them.
Further, TTIBIL was servicing and repairing of motor vehicles under the insurance policies sold by it, high claims ratio under the MISP channel, extra payments made to MISP by insurers, and disparity of treatment to agents, the complaints received by IRDAI had said.
According to IRDAI, the MISP entered into an agreement with TKM, the original equipment manufacturer (OEM) through the dealer expectation standards India (DESI) 2019, a dealer evaluation programme that gives the methodology of rewarding dealer for retaining insurance policies issued through him. The marks under the programme are linked to the rewards and incentives, which the dealer gets from the OEM. By rewarding dealer for retaining insurance policies issued through him, the principal officer (PO) of TTIBIL has contradicted his affirmations in the notorised affidavit, it added.
IRDAI says, "By imposing the above restrictions, the customer or prospect is denied his rights and options to buy or renew his motor insurance policy from any insurance intermediary and curtails the choice of prospective policyholder. The MISP actions are therefore prejudicial to the interest of the policyholder and leads to unfair trade practices TTIBIL being the sponsor of the MISP, is responsible for all omissions and commissions of MISP. It has therefore violated provisions such as inducing the customer and indulging in unfair business practice; forcing the MISP to make customers buy motor insurance policies from them and restricts choice of policyholder and prejudicial to the interest of the policyholder and leading to unfair trade practices."
In its submission, the insurance broker stated that it has appointed seven general insurers out of 25 on its panel for selling motor insurance policies. "The customer has the ultimate choice to opt from insurance from any channel or insurer of his choice. Around 3.16 lakh Toyota car owners out of 10 lakh Toyota cars sold have taken insurance through their retail car insurance. Similarly, out of 35 lakh plus Yamaha vehicles around 3.90 lakh Yamaha owners have taken insurance through their programme," it added.
TTIBIL admitted that as many as 7.06 lakh customers had bought motor insurance policies through its panel.
IRDA, however, observed that "By having allocation of marks for insurance penetration in the DESI 2019 makes the MISP force customers or prospects buy motor insurance policies from them. TTIBIL being the sponsor of the MISP and being responsible for all omissions and commissions of MISP has therefore, violated provisions of MISP guidelines."
Here is the orders issued by IRDAI against Toyota Tsusho lnsurance Broker India Pvt Ltd (TTIBIL)...
