The Insurance Regulatory and Development Authority of India (IRDAI) on Friday directed SBI Life Insurance Company to take over the policy liabilities of approximately two lakh policies and the assets of Sahara India Life Insurance Co. Ltd (SILIC) with immediate effect. The decision was made due to the deteriorating financial health of SILIC, the insurance sector regulator said.
IRDAI identified SBI Life Insurance Company (SBI Life) as the acquirer of the insurance business of Sahara India Life Insurance Company (SILIC) after the firm failed to comply with its directions.
"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.
Sahara India Life Insurance was granted a registration certificate 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 insurance regulator had appointed an Administrator to manage the business of the insurer in 2017. At that time, SILIC was also not allowed to underwrite new business.
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"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. 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," IRDAI said in a statement.
"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," it added.
In order to ensure a seamless transition for all policyholders of SILIC, IRDAI has taken necessary measures, the order said.
IRDAI added that the authority in its meeting held on Friday "decided that action is warranted to protect the interest of the policyholders of SILIC. Accordingly, the Authority decided to transfer the life insurance business of SILIC to another suitable life insurer with immediate effect."