The Insurance Regulatory and Development Authority of India (IRDAI) has recognized SBI Life Insurance Company because the acquirer-insurer of the life insurance coverage enterprise of the beleaguered Sahara India Life Insurance Co. (SILIC).
“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 mentioned in its June 2 order.
The motion was warranted to shield the curiosity of SILIC policyholders, it mentioned within the order that chronicles developments over the previous six years, together with appointment of an Administrator in 2017 to handle the enterprise, the insurer stopped to underwrite new enterprise, and subsequently the choice to switch the enterprise to one other life insurer. The Sahara Group entity then had challenged the choice earlier than the Securities Appellate Tribunal.
Separately, in a launch on Friday IRDAI cited “certain serious issues on the financial propriety and governance aspects” behind the motion 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 mentioned.
If the development is allowed to proceed, the state of affairs will worsen and lead to erosion of capital. SILIC is probably not ready to discharge its liabilities in direction of policyholders, thereby endangering the curiosity of its policyholders, IRDAI mentioned within the order on transferring the enterprise to SBI Life.
A committee comprising its Member (Actuary), Member (Life) and Member (F&I) has been fashioned by the regulator for implementation of the order in a timebound method. It directed SBI Life to take satisfactory steps to attain out to the SILIC policyholders, with regard to servicing of their insurance policies, arrange a devoted cell to handle their queries and in addition publish particulars on its web site.
