Case No. 39 of 2014. Case: Dilip Modwil Vs Insurance Regulatory and Development Authority. Competition Commision of India
| Case Number | Case No. 39 of 2014 |
| Counsel | For Appellant: Party-in-Person |
| Judges | Ashok Chawla, Chairperson, S.L. Bunker, Sudhir Mital, Augustine Peter and U.C. Nahta, Members |
| Issue | Competition Act, 2002 - Sections 19(1)(a), 2(h), 26(2), 3, 3(4)(a), 3(4)(b), 3(4)(c), 3(4)(d), 4, 4(2)(a)(i); Insurance Act, 1938 - Section 114A; Insurance Regulatory And Development Authority Act, 1999 - Sections 14, 26 |
| Judgement Date | September 12, 2014 |
| Court | Competition Commision of India |
Order:
Order under section 26(2) of the Competition Act, 2002
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Information in the present case has been filed by Shri Dilip Modwil ('the Informant') under section 19(1)(a) of the Competition Act, 2002 ('the Act') seeking a direction from the Commission to direct the Insurance Regulatory and Development Authority (IRDA) to repeal the IRDA (Licensing of Bancassurance Agents) Regulations, 2002 which allows grant of corporate agency license to banks to sell insurance products. This is alleged to lead to concentration of power in hands of bank conglomerates at the expense of lost jobs and business of insurance brokers and independent insurance agents.
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As per the information, based on the IRDA (Licensing of Bancassurance Agents) Regulations, 2002 and such other schemes for greater insurance penetration into the public, banks have been granted corporate agency license to operate in insurance retailing. It was believed that such retailing would raise competition which in turn benefits the consumers in terms of increased access to insurance products, increase in the quality of services, etc.
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It is averred that insurance retailing by banks over the years proved to be anticompetitive. It has led to increased concentration of power in hands of bank conglomerates in regards to retailing of insurance products. Banks have exploited their access to privileged customer information in selling insurance products to them. This advantage has deprived their competitors of level playing field and it has enabled banks to operate independently of the competitive forces.
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In addition, it is averred that customers have been deprived of professional expert advice. As per the Informant, insurance retailing requires specialized knowledge and professionals who specialize in the field. Such professionals are relatively better equipped in terms of specialised knowledge for selling insurance products than the employees of banks, who have only superficial knowledge about various insurance products and insurance retailing market. Banks, because of their strategic position are interested only in earning commission through selling insurance products without providing professional expert advice to the customers. Moreover, selling insurance products also requires after sale services which the employees of banks are unable to provide. In case of claims, consumers find it difficult to seek advice and service from banks. This is stated to be an unethical commercial conduct...
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