Aviva’s India Officials Approved Brokerage Model Queried By Taxmen

An Aviva business exemplary that Indian taxation officials opportunity was utilized to salary agents unlawful commissions from 2017 to 2023 was rolled retired internally successful 2013 and approved successful penning by apical India executives, a confidential institution archive shows.

Tax inspectors impeach nan British insurer of engaging successful a clandestine strategy involving hundreds of individuals and forbidden payments of $26 cardinal that utilized clone invoices to alteration nan commissions successful excess of regulatory caps, Reuters has reported.

Aviva has said it is actively engaging pinch Indian authorities, but nan accusations are nan biggest situation it faces successful a cardinal marketplace wherever it has struggled to turn amid aggravated competition.

Aviva Says India Unit ‘Engaging’ With Authorities Over Tax Investigation

Indian taxation officials person asked Aviva why it should not beryllium penalized for nan strategy successful nan play 2017 to 2023, which a confidential institution archive shows began successful 2013 and was approved by past India CEO, T.R. Ramachandran, ineligible head Ravi Bhadani and finance head Jitendra Nayyar.

Reuters is first to study nan archive that shows nan believe nether scrutiny has tally for longer than antecedently known, and was planned and approved by apical Aviva India executives.

The document, titled “Inter Office Memo (IOM) of Agent Mentor Model, 2013,” utilizing nan company’s sanction for nan scheme, reveals it took effect from July 1, 2013, and carries nan signatures of 8 elder Indian executives.

“The taxation matter referred to is presently sub judice,” nan institution said successful consequence to a Reuters petition for remark that provided it pinch a transcript of nan memo, an soul document. “Aviva India does not remark connected speculation aliases ineligible matters.”

Ramachandran, Bhadani and Nayyar did not respond to Reuters’ queries.

India’s Insurance Regulatory and Development Authority (IRDA) and nan taxation authority that issued nan informing to Aviva besides did not respond.

The memo showed Aviva took a calculated consequence pinch nan scheme.

“This statement has not been formally recognized by IRDA, (the security regulator),” it read.

“IRDA questioned this statement successful lawsuit of ICICI and different insurers, but did not levy penalty,” it added.

“On this basis, we are continuing pinch this arrangement, taxable to making judge that relatives are not hired. However, if IRDA takes an adverse guidelines connected this, we whitethorn person to adjacent this channel.”

In a May 2012 order, nan regulator said starring insurer ICICI Prudential breached nan Insurance Act by hiring unlicensed “business partners” remunerated pinch a “training and improvement support fee” proportional to nan business generated by agents they managed.

ICICI did not respond to a petition for comment.

Silver, Gold, Platinum

Aviva’s India business is tally successful business pinch home patient Dabur Invest Corp. It has held a liking of 74% successful nan associated task since 2022, erstwhile it upped a holding of 49% maintained since 2016. Until that year, it had held a stock of 26%.

A Dabur typical declined to comment, saying nan matter was sub judice.

Aviva retained nan “agent-mentor” exemplary until astatine slightest 2023, nan Indian taxation investigation announcement said, referring to nan twelvemonth successful which committee norms were eased.

Until then, IRDA had capped supplier payouts for caller policies astatine betwixt 7.5% and 40%, while renewal commissions were group lower.

Aviva hired 559 agent-mentors complete nan years, according to nan taxation notice, which Reuters reported successful August.

Their job, connected paper, was to train agents, but, connected directions from Aviva, they submitted clone invoices for “recruitment fees,” “development fees,” “team support allowances,” successful bid to alteration costs of bigger commissions.

These position look successful nan Aviva memo that showed specified agent-mentors could gain “recruitment fees” of up to $30 each period and quarterly “development allowance fees” of up to $70 for each agent.

The agent-mentors were besides classed successful categories designated arsenic “silver,” “gold” aliases “platinum.”

A “Silver Agent Mentor” could besides gain a “mentorship allowance” and “team support allowance” of 40% of first-year commissions earned by their agents, rising to 55% for those successful nan “platinum” category.

“Platinum Agent Mentors are precocious imaginable professionals who are responsible for recruitment and mentorship,” publication 1 undated Aviva document.

(Reporting by Aditya Kalra; Editing by Clarence Fernandez)

Related:

• Police Summon Aviva India CEO successful Discrimination Case, Company Denies Allegations
• UK’s Aviva Conspired to Dodge India Compensation and Tax Rules, Agency Says