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Old 9th January 2020, 13:30   #1
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Default Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

Sharing an article I read this morning, where the IRDAI has come down heavily on Maruti lnsurance Brokers Pvt Ltd (MIBL) and Hero Insurance Brokers Pvt Ltd (HIBIL) for malpractices in their insurance broking practices.

https://www.moneylife.in/article/has...ons/59046.html

https://www.scribd.com/document/4414...Dtd-17-12-2019

Last edited by //HB : 9th January 2020 at 13:34. Reason: Added URL for the IRDAI order PDF
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Old 9th January 2020, 13:56   #2
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Default re: IRDAI raps Maruti Insurance Brokers and Hero Insurance Brokers

Quote:
Customers of Policybazaar lnsurance Web Aggregator Pvt Ltd had said that customers who are purchasing insurance policies through the web-aggregator's web-site are being denied the facility of cashless claims if the motor insurance policy has not been purchased through MIBL or through MISP's sponsored by MIBL.
That's true but this is not limited to just Maruti lnsurance Brokers Pvt Ltd (MIBL) and Hero Insurance Brokers Pvt Ltd (HIBIL).

Experienced the same with Bajaj, they denied cashless claim for my P220 because I didn't buy the insurance from them.
Quote:
In two separate orders issued on 17th and 18 December 2019, IRDAI has also asked both these brokers not to pay any performance incentives to their principal officers for submitting affidavits contrary to facts of the cases. While Maruti Insurance Broking is directed to pay Rs3 crore, Hero Insurance Brokers is asked to pay Rs2.18 crore as penalty for violations of various guidelines of MISP.
The penalty is too minuscule to stop them from doing it again. Good move anyways.
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Old 9th January 2020, 14:25   #3
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Default re: IRDAI raps Maruti Insurance Brokers and Hero Insurance Brokers

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Originally Posted by wheelguy View Post
The penalty is too minuscule to stop them from doing it again. Good move anyways.
Very true; totally agree to the above view. This below part of the orders though, will probably have a decent impact on how they do business going forward
Quote:
Both Maruti lnsurance Brokers and Hero lnsurance Brokers are directed by IRDAI to...

a) dismantle panel of insurers and empanel all insurers on platform, have full integration with insurers computer systems, ensure premiums quoted to customers come directly from insurer's systems without any intervention by the broker and report compliance within three months from the date of the order. ln case any insurer does not wish to enter into an agreement with the insurance broker for selling and distributing motor insurance policies through the MISPs sponsored by MIBL/ HlBlL, the chief executive (CEO) of the general insurance company shall confirm the same in writing to the broker.

b) redesign the current system of seeking customer consent for purchasing the motor insurance policy in such a manner that the customer exercises choice of selecting the insurer through an OTP based system at the time of issuance of a new motor insurance policy and its renewal. The broker company shall complete the task in six months and report compliance.

c) submit a quarterly audit report from DISA/ CISA certified auditor that the electronic platform or portal complies with the requirements of the MISP guidelines and in no way interferes or places restrictions in the premium to be charged by insurers or in any way restricts or influences the choice of the customer.

This point caught my attention though, if they say 37% bought the insurance policies from HIBIL, then does it mean the remaining 63% bought their own policies outside of what the dealer was pushing ? I would have thought the dealer-sold policies would be way higher than just 37% of all the vehicles sold by them.
Quote:
Out of 3.52 lakh two-wheelers sold, 1.29 lakh customers or 37% bought insurance policies from HIBIL, which IRDAI says is a "very significant number and cannot be ignored"

Last edited by //HB : 9th January 2020 at 14:30. Reason: afterthought :)
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Old 9th January 2020, 14:56   #4
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Default re: IRDAI raps Maruti Insurance Brokers and Hero Insurance Brokers

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Originally Posted by //HB View Post
This point caught my attention though, if they say 37% bought the insurance policies from HIBIL, then does it mean the remaining 63% bought their own policies outside of what the dealer was pushing ? I would have thought the dealer-sold policies would be way higher than just 37% of all the vehicles sold by them.
Most of the two wheeler buyers don't take the hassle of buying the insurance outside of the showroom, I believe 99% of them buy it from the showroom itself, but these figures are something else. Either the figures must be wrong or they might have included the renewals too which make these figures justifiable as most of the renewals go out of dealer's hands.
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Old 9th January 2020, 16:07   #5
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Default Maruti-Suzuki on CCI radar for forcing buyers to purchase its car insurance

India's antitrust regulator is looking into allegations that Maruti Suzuki, the country's biggest car maker, pushes buyers to purchase insurance policies offered by the company, two sources with direct knowledge of the matter told Reuters.

The Competition Commission of India (CCI) in June last year received an anonymous complaint alleging insurance plans recommended by Maruti while selling cars resulted in customers paying more compared with other options in the market.

Based on the complaint, the CCI is assessing whether Maruti has engaged in so-called "tie-in arrangements", in which a car maker promotes preferred suppliers of complementary goods such as lubricants or insurance, the sources said.

Indian law says such practices are anti-competitive if they end up stifling competition and limiting consumer choices.

Source full article:https://www.livemint.com/companies/n...562296983.html
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Old 9th January 2020, 17:33   #6
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

While pushing for Maruti brokered insurance during purchase is one thing, I would like to add another point here.

If you are already on Maruti brokered policy, want to switch to another one (i. e. direct with a provider) and approach any of the popular insurers who has tie up with Maruti insurance broking , the quote you get will be same as what Maruti provides you. They will not provide you a lower quote or any discounts even if you are eligible. When queried, they respond, for existing Maruti policies, we have direction to provide only this much; can't provide any further discount.

I have seen this multiple instances. One case in point, the insurer who offers a good discount for employees of my organization denies to provide that discount if the existing policy is from Maruti insurance broking, stating, for existing Maruti policies, this is what we can give.
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Old 9th January 2020, 17:47   #7
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

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Originally Posted by MSAneesh View Post
One case in point, the insurer who offers a good discount for employees of my organization denies to provide that discount if the existing policy is from Maruti insurance broking, stating, for existing Maruti policies, this is what we can give.
I don't think this is limited to Maruti vehicles having ongoing Maruti Insurance policy, but applicable across all Maruti vehicles.

I faced this when trying to renew insurance for my Alto. I usually get insurance done through a family friend who works for an insurance company. They are able to decrease premium amount by adding a discount percentage. Something similar to NCB, only that this percentage and calculation is at discretion of the insurance employee and not visible to the customer.

The logic of giving such an option is to decrease the amount based on the sales potential.

For Maruti cars, since the Maruti Insurance is through tie up with this insurance provider also among others. They have arrived at an agreement to cap the maximum employee provided percentage.
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Old 9th January 2020, 18:05   #8
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

LOL!! This was waiting to happen! I am so happy! Last November, I was heckled by these Maruti lunatics day and night! Finally asked them to send the quote, looked at it, did some comparisons and politely refused. Went with Bharati Axa who gave a better quote, were flexible enough to include few extras for no additional cost. Overall, Bharati Axa was keen to listen to me while Maruti was only interested in a renewal.
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Old 9th January 2020, 18:09   #9
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

Quote:
Originally Posted by mpksuhas View Post
I don't think this is limited to Maruti vehicles having ongoing Maruti Insurance policy, but applicable across all Maruti vehicles.

For Maruti cars, since the Maruti Insurance is through tie up with this insurance provider also among others. They have arrived at an agreement to cap the maximum employee provided percentage.
This is even more interesting.

So, for a Maruti car, irrespective of what policy is currently held, a quote from any of the 11 listed providers who are Maruti Insurance Broking partners, you will get pretty much the same quote, and that will be same as what you get from Maruti broking as well. So customers won't really bother looking out other than Maruti Insurance Broking.
This is even more monopolizing!
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Old 9th January 2020, 19:00   #10
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

There is a thread on this:

https://www.team-bhp.com/forum/india...ltd-hibil.html

This is not limited to just Maruti or Hero; dealers of several manufacturers (I've had this experience with Ford and Hyundai A.S.S.) refuse cashless if the policy hasn't been taken through a dealer, even if it is from a preferred insurance provider. They have no fear of complaints to the IRDAI. This notice should get them in check.
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Old 9th January 2020, 19:15   #11
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

We normally take our own insurances from New India and at good discounts but the last time we bought Gypsy, New India guy refused to offer lower rates on Maruti vehicle citing restrictions. So, there is something definitely fishy.
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Old 10th January 2020, 09:34   #12
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Default re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

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Originally Posted by SnS_12 View Post
The Competition Commission of India (CCI) in June last year received an anonymous complaint alleging insurance plans recommended by Maruti while selling cars resulted in customers paying more compared with other options in the market.
Strange. IMHO, I always found Maruti insurance cheaper than the market especially for a yellow board car. Further, the customer has his own free will to get whatever insurance he desires. As a former Maruti salesman, let me assure you we never forced customers to opt for Maruti insurance. However, many car buyers ended up getting it as it was a one stop shop solution. We also sold cars to Orix and other lease customers, who take their own insurance, so I can confidently say for a fact that Maruti Insurance (MI), is not forced upon. Maybe sweet talked by the sales person - Yes!

Quote:
Based on the complaint, the CCI is assessing whether Maruti has engaged in so-called "tie-in arrangements", in which a car maker promotes preferred suppliers of complementary goods such as lubricants or insurance, the sources said.
This is already done by many companies - LIC agents, insurance agents, sales persons etc. I would hardly call it a malpractice. Maybe, a little more transparency should have been there, but hardly the reason for a complaint.

Quote:
Originally Posted by mpksuhas View Post
For Maruti cars, since the Maruti Insurance is through tie up with this insurance provider also among others. They have arrived at an agreement to cap the maximum employee provided percentage.
I would disagree. I have got insurance renewals from other companies (non MI) and got good rates / IDV which MI wasn't offering.

Quote:
Originally Posted by libranof1987 View Post
dealers of several manufacturers (I've had this experience with Ford and Hyundai A.S.S.) refuse cashless if the policy hasn't been taken through a dealer, even if it is from a preferred insurance provider. They have no fear of complaints to the IRDAI. This notice should get them in check.
This depends on dealer Tie-ups. All my cars insurance (except 1) has been taken directly. I just check which provider has tie up with my garage for cashless. Used to take Future Generali, but now getting HDFC ergo these days.

Quote:
Originally Posted by Turbanator View Post
We normally take our own insurances from New India and at good discounts but the last time we bought Gypsy, New India guy refused to offer lower rates on Maruti vehicle citing restrictions.
Could be a specific case of Gypsy! Because I have come across insurance guys not willing to insure a Fiat.
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Old 10th January 2020, 11:32   #13
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Default Re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

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Originally Posted by blackwasp View Post
I would disagree. I have got insurance renewals from other companies (non MI) and got good rates / IDV which MI wasn't offering.
If this is true, I would like to explore. Which is the other provider who offered you a better rate? I have been trying this for the last 2 renewals.

National Insurance, who has a sales desk in our office usually offers 20% to 30% additional discount. I used to get this when I had my Hyundai car. Now, for the Brezza, I tried the same for last two renewals, both instances when queried about the company discount, they informed me that they have restrictions not to go below the value they gave, which was same as what I got from Maruti insurance.
Now, the next renewal is due in Feb and when I approached NI desk last week, same story.
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Old 10th January 2020, 11:49   #14
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Default Re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

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Originally Posted by MSAneesh View Post
If this is true, I would like to explore. Which is the other provider who offered you a better rate? I have been trying this for the last 2 renewals.
My 800 has insurance from Reliance insurance. Just today morning renewed insurance for my 15 year old WagonR from HDFC Ergo. MI was 6.8k while HDFC was 4.8k. This was done via offline means in both cases if that helps. 800 was due to change in ownership (I have got it used) while for the WagonR, a friend recently started dealing in car insurance so went via him.
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Old 10th January 2020, 13:22   #15
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Default Re: Maruti & Hero on CCI radar for forcing buyers to purchase their vehicle insurance

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Originally Posted by blackwasp View Post
I would disagree. I have got insurance renewals from other companies (non MI) and got good rates / IDV which MI wasn't offering.
Yes, you would get for lesser rates that MI for sure. My point was slightly different.

Last year when purchasing an Ignis, MI was quoting 35K as insurance amount. For the same duration, I was able to get insurance from Oriental insurance for 28K (Same IDV, 3 years third party, 1 year zero dep).

However, if it was not a Maruti make vehicle, my family friend mentioned that they can (insurance employee) can decrease my premium further by increasing the discount option which employee has. In my case, the upper limit of the discount was capped since MI has tie-up with them.
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