New India Assurance chairman M Ramadoss suspended

NEW DELHI: The government has suspended New India Assurance chairman M Ramadoss for alleged violations in issuing insurance cover to an airline during his stint as head of another state-run insurer. The Central Bureau of Investigation (CBI) is examining Ramadoss’ role in irregularities in granting credit insurance cover to Paramount Airways when he was chairman and managing director of general insurance firm Oriental Insurance.

“We have suspended Ramadoss till the time the investigation is on. Further decision will be taken once the investigation is over. In the meantime, Srinivasan, chairman of United India Insurance, will hold the interim charge,” a senior government official told ET. A CBI official confirmed the development saying, “We are looking into the matter. The residence of Ramadoss was raided.”

This is the second instance of action being taken against a head of a public sector insurance firm. Earlier, TS Vijayan, the chairman of the country’s largest insurer, Life Insurance Corporation, was denied an extension after complaints against him surfaced.

Oriental Insurance, which said the company did not make any loss on Paramount's account, had cancelled the policy when it came up renewal in April last year over apprehensions on the underwriting judgment and risk factors. The government started looking into the affairs of New India Assurance, the country’s largest general insurance firm, after it posted a net loss of Rs 421 crore last fiscal, the first time in 90 years of operations.

“Given the current situation, it was required that the company’s decision should not come under further scrutiny,” the government official said. ET had reported the finance ministry had sought explanation over the losses made by the insurer. New India Assurance reported a loss of about .`300 crore on account of natural disaster-related claims in Australia and New Zealand.