TLDR:
- UK insurer Aviva allegedly breached Indian regulations on agent commissions
- Company accused of using fake invoices to channel $26 million to agents from 2017-2023
- Indian tax agency cites emails and messages as evidence of conspiracy
- Aviva faces potential $11 million in penalties
- Case part of broader $610 million tax evasion investigation into Indian insurers
British insurer Aviva’s Indian operations have come under scrutiny following allegations of regulatory breaches and tax evasion.
According to a notice from India’s Directorate General of GST Intelligence, Aviva is accused of using a system of fake invoices and clandestine cash payments to circumvent local regulations on sales agent commissions.
The tax agency claims that between 2017 and 2023, Aviva’s India business paid approximately $26 million to entities supposedly providing marketing and training services.
However, investigators allege these vendors were actually a front for channeling excess funds to Aviva’s insurance agents, in violation of commission caps set by Indian regulators.
The notice, dated August 3, 2024, is part of a broader investigation into over a dozen Indian insurers for alleged evasion of $610 million in unpaid taxes, interest, and penalties. Aviva specifically is accused of using about $26 million in fake invoices to incorrectly claim tax credits and evade $5.2 million in taxes.
Evidence cited by the tax agency includes emails and WhatsApp messages between Aviva executives and insurance distributors, discussing methods to bypass compensation regulations.
The 205-page report also contains summaries of interviews with Aviva executives, including Chief Financial Officer Sonali Athalye, who reportedly described how payments were made.
One tactic allegedly employed by Aviva involved hiring 559 “agent mentors” who were supposed to train sales agents. However, investigators claim no such services were provided, and these individuals instead issued fake invoices to facilitate excess commission payments.
The tax agency’s notice also details a system where Aviva officials would take photos of 10-rupee bills and send them to both vendors and insurance agents. Agents would then reportedly use these photos to collect their excess commissions in cash from the vendors.
Aviva’s India business is a joint venture with local firm Dabur Invest Corp., with Aviva owning a 74% stake. The company faces potential penalties of around $11 million, roughly equivalent to its 2023 profit from selling life insurance in India.
In response to the allegations, a UK-based Aviva spokesperson stated, “We do not comment on speculation or ongoing legal matters.”
The company’s Indian operations did not respond to queries, but a source familiar with the matter indicated that Aviva intends to contest the allegations.
Indian regulators had previously capped commissions on new policies at between 7.5% and 40%, depending on the product, with even lower limits on renewal commissions. These restrictions were relaxed in 2023, but the alleged violations occurred under the previous regulatory regime.