NEW DELHI: The government has suspended M Ramadoss chairman of New India Assurance of the country's largest general insurance firm. Central Bureau of Investigation is examining Ramadoss' role in the irregularities in distribution of credit insurance cover to Paramount Airways.
This is the second instance when head of a public sector insurance firm has been removed. Earlier, chairman of India's largest insurer Life Insurance Corporation, TS Vijayan was denied an extension after there were complaints against him.
"We have suspended Ramadoss till the time the investigation is on and further decision will be taken once the investigation is over. In the mean time, Srinivasan, chairman of United India Insurance will hold the interim charge," a senior government official confirmed to ET.
Ramadoss was the CMD of Oriental Insurance when the credit insurance cover to Paramount Airways was approved. Oriental Insurance had confirmed that the company did not make any losses on Paramount's Account.
Oriental Insurance had apprehensions on the underwriting judgment and risk factors and hence decided to cancel the policy, when it came up renewal in April 2010.
The government is already looking into the affairs of the country's largest general insurance firm, New India Assurance, after the firm posted a net loss of Rs 421 crore in 2010-11.
"Given the current situation it was required that the company's decision should not come under further scrutiny," the official said.
ET had reported that the finance ministry had sought explanation over the losses made by the insurer. The company has posted losses for the first time in 90 years of its operations.
New India Assurance had defended its losses and said that around Rs 300 crore of the loss was from international operations as they were re-insures for some companies in Australia and New Zealand, both countries suffered from natural disasters in form of floods and earthquake.
A CBI official confirmed to ET that the investigation in Paramount Airways case is on. "We are looking into the matter. The residence of Ramadoss was raided," the official said.
A senior official with new India Assurance said that company is not affected by the decision. "We are hopeful that this will be resolved quickly. In any case we have senior government officials on our board," the official said. Department of economic affairs Secretary R Gopalan is on the company's board.
........EDITOR
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