After a ban of around two years by the insurance regulator, Maruti Suzuki India Limited is back in the distribution of car insurance policies. Maruti Suzuki has sought a broking license from IRDA and formed a company by the name Maruti Insurance Broking Private Limited.
The insurance broking company will be headed by Mayank Pareek who has over 15 years of experience in the automobile industry, as the Managing Executive Officer. Mayank who heads Marketing & Sales, joined Maruti Suzuki in 1991 and has an experience across various functions like Sales, Corporate Planning and Dealer Development.
Maruti had set up a separate entity named as Maruti Insurance in 2002 and started distribution of car insurance policies through its nation-wide dealer network. Maruti Insurance tied up as a corporate agent with National Insurance Company, Bajaj Allianz, New India Assurance and Royal Sundaram and sold insurance policies. The company was set up with two subsidiaries and by December 2005 they were able to sell more than two million insurance policies.
As per rule, a corporate agent can hold a license to act as an insurance agent for only one life insurance company and one general insurance company. Reports suggested that Maruti Suzuki India Ltd had formed five group entities Maruti Insurance Distribution Services Ltd, Maruti Agency Network Ltd, Maruti Insurance Agency Services, Maruti Insurance Agency Logistics Ltd and Maruti Insurance Agency Solutions Ltd. Maruti was acting as a corporate agent through these group entities for five or six insurance companies which was considered as a violation of the rules laid down by IRDA. This is considered to be the prime reason of levying the ban on Maruti Insurance. Moreover, some of the insurance companies complained that Maruti authorised service centres were inflating the bill amounts for car repairs and claiming higher amounts than the actual claim. This resulted in heavy losses for those insurance companies and motor insurance industry as a whole.
Mayank Pareek said that Maruti Insurance Broking Pvt Ltd was formed in November 2010 and it is a separate entity with a separate infrastructure. The company seems to be doing its best to fit into all the regulations laid down by the insurance regulator. Since the parent company, Suzuki Motor holds 54.21% in Maruti Suzuki India Limited they cannot fit into the foreign equity rules laid down for the insurance sector. Hence Maruti Insurance Broking Pvt Ltd has been formed with equity participation from other companies thereby abiding by all the rules of the Insurance Act and IRDA.
The car insurance sector is a booming market in India and is estimated to grow at a rate of 20-22% every year. Maruti through its nation-wide dealer network had close to 10% of the total market share in the total premiums collected. Their insurance business came to a standstill because of gaps in the compliance of rules and hence was a huge setback to the company’s overall profitability. But now with the new insurance broking channel in place, Maruti hopes to make good for the lost ground soon.
