Regulator Irdai on Friday directed SBI Life Insurance Company to takeover the policy liabilities of around two lakh policies along with assets of Sahara India Life Insurance Co Ltd (SILIC) with immediate effect.
The decision was taken at the meeting of the Insurance Regulatory and Development Authority of India (Irdai) in view of deteriorating financial health of the SILIC.
”The Authority has identified SBI Life Insurance Company Limited (SBI Life), which is one of the largest life insurers in the country with satisfactory financials, as the acquirer insurer of the life insurance business of SlLIC.
”SBI Life shall take over the policy liabilities of around two lakh policies of SILIC, backed by the policyholders’ assets, with immediate effect,” Irdai said in its order.
ManipalCigna Health Insurance appointed as Lead Insurer for K’taka to create insurance awareness under IRDAI’s State Insurance Plan
CBI books infra firm, former CMD in over Rs 3,800 crore bank fraud case; searches at 4 locations
BJP leader Suvendu Adhikari demands CBI probe into 'corruption' in central govt scheme in Bengal
In a statement, the Irdai said it has also taken necessary steps to ensure the smooth transition for all policyholders of SILIC.
A committee comprising of Member (Actuary), Member (Life), and Member (F&I) has been constituted for implementation of the order in a time-bound manner.
”SBI Life has been directed to take adequate steps to reach out to the policyholders of SILIC, 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,” it said.
Sahara India Life Insurance 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 authority had appointed an administrator to manage the business of the insurer in 2017, Irdai said.
The 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 compliances, SILIC has failed to comply with directions of the authority and take any affirmative steps to protect the interests of its policyholders,” the regulator said.
Further, the policy data of SILIC reveals that the company’s portfolio is showing 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 SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” Irdai said.
It said the action against SILIC has been taken after due consideration of all the facts and circumstances.
The authority added in its meeting held on June 2, 2023 that the action was warranted to protect the interest of the policyholders of SILIC.
Irdai further said it will continue to monitor the situation and also issue necessary directions as required in the interest of the policyholders of SILIC.