The Insurance Regulatory and Development Authority of India (IRDAI) has identified SBI Life Insurance Company as the acquirer-insurer of the business of the beleaguered Sahara India Life Insurance Co. (SILIC).
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“SBI Life shall take over the policy liabilities of around two lakh policies of SILIC, backed by the policyholders’ assets, with immediate effect,” the regulator said in its June 2 order.
The action was warranted to protect the interest of SILIC policyholders, it said in the order that chronicles developments over the past six years, including appointment of an Administrator in 2017 to manage the business, the insurer stopped to underwrite new business, and subsequently the decision to transfer the business to another life insurer. The Sahara Group entity then had challenged the decision before the Securities Appellate Tribunal.
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Separately, in a release on Friday IRDAI cited “certain serious issues on the financial propriety and governance aspects” behind the action in 2017.
“Despite being provided ample opportunities and time to ensure compliances, SILIC failed to comply with directions of the Authority and take any affirmative steps to protect the interests of its policyholders. Further, 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,” it said.
If the trend is allowed to continue, the situation will worsen and lead to erosion of capital. SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders, IRDAI said in the order on transferring the business to SBI Life.
A committee comprising its Member (Actuary), Member (Life) and Member (F&I) has been formed by the regulator for implementation of the order in a timebound manner. It directed SBI Life to take adequate steps to reach out to the SILIC policyholders, with regard to servicing of their policies, set up a dedicated cell to address their queries and also publish details on its website.