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The Competition Commission of India closes an information case against the Insurance Regulatory and Development Authority of India and the Indian Institute of Insurance Surveyors and Loss Assessors. The informant alleges that making institute membership mandatory for surveyor license renewal creates a monopoly and constitutes an abuse of dominant position. The Commission rules that the regulatory functions exercised by statutory authorities under the Insurance Act and the Insurance Regulatory and Development Authority Act are outside the scope of its jurisdiction.
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COMPETITION COMMISSION OF INDIA
Case No. 15 of 2023
In re:
Shrikant Ishwar Mendke BUDA Scheme 27, Plot No.11 Opp. Sambhaji Udyan Mahadwar Road, Belgaum Karnataka - 590001
Informant
And
Insurance Regulatory and Development Authority of India Sy No. 115/1 Financial District Nanakramguda Gachibowli Hyderabad-500032
Opposite Party No. 1
Indian Institute of Insurance Surveyors and Loss Assessors 6-1-73, Off No. 104 and 106 First Floor, Saeed Plaza, Lakdikapool Hyderabad- 500004
Opposite Party No. 2
CORAM:
Ms. Ravneet Kaur Chairperson
Ms. Sangeeta Verma Member
Mr. Bhagwant Singh Bishnoi Member
Order under Section 26(2) of the Competition Act, 2002
The present Information has been filed by Shri Shrikant Ishwar Mendke under Section 19(1)(a) of the Competition Act, 2002 (‘the Act’) against Insurance Regulatory and Development Authority of India (‘IRDAI’/ ‘OP-1’) and Indian Institute of Insurance Surveyors and Loss Assessors (‘IIISLA’ /‘OP-2’) alleging contravention of the provisions of Sections 3 and 4 of the Act.
The Informant is stated to be the holder of a license to act as a Surveyor and Loss Assessor bearing No. IRDAI/IND/SLA-9711 (‘license’) since 06.12.1984. The said license is said to be renewed every 5 years by the Informant till 05.12. 2019. IRDAI/ OP-1 is a statutory body set up under Section 3 of the Insurance Regulatory and Development Authority of India Act, 1999 (‘IRDAI Act’) for inter alia protecting the interests of the policyholders and regulating, promoting, and ensuring orderly growth of the insurance industry in India. As per the Informant, IIISLA/ OP-2 was established and incorporated on 04.10.2005 under Section 14(2) (f) of the IRDAI Act and Section 25 of the Companies Act, 1956 to promote and regulate Surveyors and Loss Assessors.
The Informant has submitted that it had applied for renewal of the license on 18.11.2019 which has been allegedly withheld by IRDAI for the sole reason that the Informant is not a member of IIISLA. As per the Informant, IRDAI has mandated membership with the IIISLA as an eligibility criterion for grant of renewal by notification published in official gazette on 22.03.2013. The Informant has stated that it had taken membership of IISLA initially, but stopped paying subscription fee/ annual membership fee since the financial year 2008-09, as, in his opinion, within three years of its establishment, IIISLA failed to make any noteworthy progress in attaining the objects of its establishment.
The Informant further stated that to comply with the statutory requirement of being a member of IIISLA, it attempted to become a member again by way of an online application bearing No. 10001841 dated 09.08.2021. But, IIISLA had not taken any action on the application despite the statutory requirement that it shall grant membership to the person eligible within 15 days from the date of receipt of membership application. Thereafter, Informant preferred an appeal before IRDAI, which was closed unilaterally and it was intimated to the Informant by an e-mail sent on 06.01.2022 by IRDAI that the membership application is blocked due to non-payment of subscription fee for three years.
The Informant has further averred that subsequently, IRDAI closed even application for renewal of the license of the Informant and informed him vide email dated 11.01.2022. It has been also submitted by the Informant that vide email dated 09.04.2022, IIISLA raised additional requirements in a piecemeal manner requiring the Informant to submit FORM 26AS from 2019 to till date as well as the Informant’s current employment status. The Informant states that it fulfilled such requirement vide email dated 19.04.2022, under protest, since the disposal of the membership application was already delayed considerably.
The Informant has also stated that it had lodged a complaint against IIISLA before the IRDAI vide email dated 25.05.2022 for causing undue delay and exercising arbitrary discretion in dealing with its membership application. However, IRDAI did not resolve the complaint. The Informant thereafter sent reminders on 15.06.2022 and 03.08.2022 but in vain as IRDAI did not take cognizance on the complaint.
The Informant has alleged that IIISLA has abused its dominant position, conferred by the statute by IRDAI, by resorting to unfair and restrictive trade practices as mentioned hereinabove, which are in contravention of the provisions of Section 4(2)(a)(ii), Section 4(2)(b)(i), Section 4(2)(b)(ii) and Section 4(2)(c) of the Act. As per the Informant, IRDAI has created a monopoly in favour of IIISLA by making membership with it a statutory requirement for grant of licence by IRDAI. It is alleged that IIISLA is not dealing with the application of the Informant for membership and is further raising irrelevant queries, seeking recovery of subscription dues of INR 31,860/-, threatening to initiate disciplinary proceedings, etc., and has thereby abused its dominant position.
In addition to the above, the Informant has also alleged that to strengthen the IIISLA to serve its purposes, IRDAI empowered its status by mandating membership of IIISLA as an eligibility criterion for grant of a valid licence to act as a Surveyor and Loss Assessor and further, the period of license was brought down to 3 years from 5 years by way of IRDAI (Insurance Surveyors and Loss Assessors) Regulations 2015. As per the Informant, such action, being in concert, are in contravention of sub-section (2) and 3(b) of Section 3 of the Act.
The Informant has also sought an interim relief under Section 33 of the Act seeking a direction to IRDAI to approve the applications of the Informant for renewal of licence to act as Surveyor and Loss Assessor.
Having considered the averments and allegations made in the Information, the Commission notes that the Informant primarily appears to be aggrieved by the alleged anti-competitive arrangement between IRDAI and IIISLA, which resulted in non-renewal of his license to act as Surveyor and Loss Assessor by IRDAI, as detailed in the Information. As per the Informant, IRDAI has created a statutory monopoly in favour of IIISLA by mandating its membership as an eligibility criterion for grant and renewal of licences and IIISLA has abused its dominant position by withholding the grant of membership due to non-payment of past dues of annual subscription fee to IIISLA.
The Commission notes that IRDAI has been set up under the Insurance Regulatory and Development Authority Act, 1999 to provide inter alia for the establishment of an Authority to protect the interests of holders of insurance policies, to regulate, promote and ensure orderly growth of the insurance industry and for matters connected therewith or incidental thereto. Further, IIISLA has been established and promoted by IRDAI under Section 14(2)(f) of the Insurance Regulatory and Development Authority of India Act, 1999 which empowers it to promote and regulate professional organisations connected with the insurance and re-insurance business. IIISLA’s Memorandum of Association provides that its main objects are as follows:
