Regulator directs SBI Life to take over Sahara Life policies
Founded in 2004, Sahara India Life Insurance was a pioneer in the life insurance business in India under the patronage of Subroto Roy, the ambitious founder of the group.
PremiumMumbai: The Insurance Regulatory and Development Authority of India has directed SBI Life Insurance Co Ltd to take over the nearly 200,000 policies of Sahara India Life Insurance Co Ltd in order to protect the interests of policyholders of the defunct insurance arm of the Sahara Group.
After a regulatory meeting to address the challenges faced by Sahara India Life, Irdai said in a statement that India’s largest private life insurer must immediately take over Sahara’s life insurance business. “Upon reviewing Sahara India Life’s policy data, it is apparent that its portfolio is experiencing a run-off trend," said Irdai.
Founded in 2004, Sahara India Life Insurance was a pioneer in the life insurance business in India under the patronage of Subroto Roy, the ambitious founder of the group. But, the once- flourishing conglomerate collapsed after India’s financial regulators caught Roy on charges of defrauding investors with a series of Ponzi schemes.
The decision by Irdai follows Sahara India Life’s failure to comply with the extant regulatory requirements and its inability to take steps to safeguard the interest of policyholders, Irdai said. The firm has faced “significant challenges regarding financial propriety and governance," it added.
In 2017, Irdai took action by appointing an administrator to assume control of Sahara India Life, and imposed restrictions, prohibiting the insurer from engaging in new underwriting activities.
“Despite numerous opportunities and ample time to rectify the situation, Sahara India Life Insurance has not addressed issues adequately."
Irdai said its financial position has steadily deteriorated, with mounting losses, as well as higher a percentage of claims in relation to total premium. “If this trend persists, it could lead to further capital erosion and it may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of policyholders," Irdai added.
Exercising its special powers, Irdai executed the transfer of the firm’s operations to SBI Life Insurance.
Irdai has formed a panel to oversee the transition of all Sahara India Life policyholders.
“This committee will be responsible for implementing Irdai’s order within a specific timeframe. SBI Life has been instructed to take necessary measures to reach out to Sahara India Life policyholders, including establishing a dedicated cell to address their queries and publishing relevant details on its website," said Irdai, adding that the insurance watchdog will be monitoring the situation closely.
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