Regulatory compliance is a cornerstone for ensuring the stability and integrity of the insurance industry. The recent circular by the Insurance Regulatory and Development Authority of India (Irdai), dated November 10, 2023, sheds light on the intricacies of compliance faced by insurance brokers. Let's delve into the details and extract valuable lessons for brokers and businesses. Individuals may look into these aspects before signing up with a service provider.
The circular addresses the case of M/s. Centcart Insurance Broking Services Private Limited (CIBSPL), a broker seeking renewal of its certificate of registration. The regulatory body, Irdai, identified non-compliance issues related to the submission of periodic returns, raising concerns about the authenticity of documents provided by the broker.
One of the primary charges against CIBSPL pertains to the violation of regulation 39(1), which mandates the filing of certified certificates by the auditor at specified intervals. The broker failed to submit these certificates for multiple periods, citing technical issues and the pandemic's impact on their operations.
Lesson Learned: Adhering to regulatory timelines is crucial. While unforeseen challenges may arise, maintaining open communication with regulatory authorities and promptly addressing issues can mitigate potential risks.
Charge 2 highlights the importance of filing periodical returns within the specified time using the Authority's Business Analytical Project (BAP) module. CIBSPL attributed its delay to technical glitches, prompting a reminder of the need for robust technological infrastructure.
Lesson Learned: Emphasizing the importance of a resilient and secure technological framework ensures smooth compliance processes. Implementing checks and balances, as seen with the introduction of a maker-checker system by CIBSPL, can prevent future technical hiccups.
The most severe charge against CIBSPL involves submitting forged documents, specifically tampered certificate copies from their Chartered Accountant. The broker admitted this wrongdoing, attributing it to a disgruntled employee's fraudulent actions.
Lesson Learned: Maintaining the integrity of documentation is non-negotiable. Strict internal controls, thorough audits, and employee training are essential to prevent fraudulent activities that could tarnish an organisation's reputation.
The Irdai circular serves as a reminder that adherence to regulatory norms is paramount in the financial services sector. Individuals and businesses involved in personal finance should prioritise transparency, technological resilience, and ethical conduct to steer the regulatory ocean successfully. By learning from the challenges faced by CIBSPL, stakeholders can fortify their compliance frameworks and contribute to a robust and trustworthy financial ecosystem.