How did Aviva allegedly bypass commission limits for sales agents?

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Aviva Allegedly Used Fake Invoices and Cash Payments to Bypass Indian Commission Limits

Aviva's India operations are accused of circumventing regulations on sales agent commissions through a scheme involving fabricated invoices and undeclared cash payments. Between 2017 and 2023, the company allegedly funneled approximately US$26 million to entities for marketing and training services, which investigators claim were merely fronts for illicit commission payments to agents. This practice, investigators assert, was a deliberate conspiracy to bypass India's commission caps, which previously restricted payments on new policies to between 7.5% and 40%, depending on the product, with even lower rates for renewals.
System of Fake Invoices for Marketing and Training Services

Investigators found that Aviva's India business paid around US$26 million to various entities between 2017 and 2023, purportedly for marketing and training services. However, the Directorate General of GST Intelligence stated that these vendors did not perform any actual work and served as a conduit to channel funds to Aviva's insurance distributors. This alleged use of fake invoices was central to the conspiracy, investigators noted, to pass on money to insurance distributors beyond the legally permitted limits.
"Override Commission" and Vendor Kickbacks

Aviva officials allegedly referred to payments exceeding regulatory limits as "ORC," an abbreviation interchangeably used with terms like "marketing and sales promotion expenses." This practice allowed the company to exceed the commission caps while maintaining a semblance of compliance. Furthermore, vendors involved in generating these fake invoices reportedly received a portion, approximately 5%, of the billed amount for their participation in the scheme.
"Agent Mentors" and Familial Connections

In addition to marketing services, Aviva allegedly hired 559 individuals as "agent mentors" under the guise of training sales agents. The notice claims that no such training services were provided, and these individuals instead issued fake invoices to Aviva. This mechanism facilitated the disbursement of excess commissions to agents. In at least one documented instance, an agent and an agent mentor were found to have familial ties, with Aviva reportedly suggesting the appointment of an agent mentor specifically for the purpose of disbursing additional commission.
Clandestine Cash Disbursements

The alleged scheme also involved clandestine cash payments to agents. Aviva officials reportedly facilitated these transactions by taking photographs of 10-rupee banknotes and sharing them with both vendors and insurance agents. Insurance agents would then present these banknote images to vendors to receive their excess commissions in cash, further obscuring the illicit nature of the payments and avoiding official record-keeping.

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How did Aviva allegedly bypass commission limits for sales agents?

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