Chennai, Jun 2 (IANS): The Insurance Regulatory and Development Authority of India (IRDAI) on Friday ordered SBI Life Insurance Company Ltd to take over the life insurance business of Sahara India Life Insurance Company Ltd.
Listed on the bourses, SBI Life shall take over the policy liabilities of around two lakh policies of Sahara India Life, backed by the policyholders' assets, with immediate effect, the IRDAI said.
According to IRDAI, SBI Life is one of the largest life insurers in the country with satisfactory financials.
It said a committee composed of Member (Actuary), Member (Life), and Member (F&I) has been constituted for implementation of the business transfer order in a time bound manner.
"SBI Life has been directed to take adequate steps to reach out to the policyholders of SILIC (Sahara India Life), with regard to servicing of policies, including setting up of a dedicated cell to address the queries of the policyholders of SILIC, and also publish necessary details on their website," the IRDAI said.
The IRDAI will also issue necessary directions as required in the interest of Sahara India Life's policyholders.
Sahara India Life was granted a Certificate of Registration in 2004 to transact the business of life insurance.
In view of the certain serious issues on the financial propriety and governance aspects of the insurer, the IRDAI had appointed an Administrator to manage the business of the insurer in 2017.
The life insurer was also not allowed to underwrite new business.
Thereafter, further directions were issued to the insurer to meet the regulatory requirements.
Despite being provided ample opportunities and sufficient time to ensure compliance, Sahara India Life failed to comply with IRDAI's directions and take any affirmative steps to protect the interests of its policyholders.
Further, the policy data of Sahara India Life reveals that the company's portfolio is showing a run-off trend. The financial position has been deteriorating with rising losses and higher percentage of claims to total premium.
If the trend is allowed to continue, the situation will worsen and lead to erosion of capital and Sahara India Life may not be able to discharge its liabilities towards policyholders and endangering their interests, the IRDAI said.
"After due consideration of all the facts and circumstances, the Authority (IRDAI) in its meeting held on 2nd June 2023 decided that action is warranted to protect the interest of the policyholders of SILIC," IRDAI said.
"Accordingly, in exercise of its powers under sub-section (2) of Section 52B of the Insurance Act, 1938, the Authority decided to transfer the life insurance business of SILIC to another suitable life insurer with immediate effect," the IRDAI said.
The IRDAI also said, the Sahara India Life shareholder's investments shall be under the control and supervision of the Administrator till further orders.