Irdai orders takeover of Sahara Life by SBI Life to protect policyholders


In an effort to protect the interest of thousands of policyholders of defunct Sahara Group’s insurance arm Sahara India Life Insurance Co. Ltd., the insurance regulator, on Friday, directed a take-over of the company’s all the 2 lakh-odd live insurance policies by India’s largest privately held life insurer SBI Life Insurance Co. Ltd.

Following a regulatory meeting on the issues plaguing Sahara India Life, the Insurance Regulatory and Development Authority of India or Irdai said in a release that the regulator has ordered an immediate transfer of Sahara’s life insurance business to SBI Life Insurance.

“Upon reviewing Sahara India Life’s policy data, it has become apparent that the company’s portfolio is experiencing a run-off trend,” said Irdai.

Sahara India Life was started in 2004 as the first wholly Indian-owned life insurance firm by blotted entrepreneur Subroto Roy-promoted Sahara Group, whose entire business empire collapsed after India’s financial regulators caught Roy of swindling millions of investors through a bunch of ponzi schemes.

Irdai’s Friday’s decision follows Sahara India Life’s failure to comply with the extant regulatory requirements and the insurer’s inability to take necessary steps to safeguard the interest of its policyholders, said the release by Irdai.

Sahara India Life has faced “significant challenges regarding financial propriety and governance,” said the regulator.

In 2017, due to these concerns, the Irdai had appointed an administrator to oversee the management of Sahara India Life, and had prohibited the insurer from underwriting any new business.

“Despite numerous opportunities and ample time to rectify the situation, Sahara India Life Insurance has not addressed the issues adequately,” said Irdai.

Irdai said Sahara India Life’s financial position has steadily deteriorated, with mounting losses and a higher percentage of claims in relation to total premium.

“If this trend persists, it could lead to further capital erosion and Sahara India Life may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” said Irdai.

Utilizing a special power under the Insurance Act, Irdai decided to transfer Sahara India Life’s insurance business to a suitable insurer (SBI Life Insurance) without delay.

With a 7.98% market share SBI Life is the country’s largest private sector life insurer. For the fiscal 2023, SBI Life collected a new business premium of Rs. 29,587.60 crore, recording a 16.22% growth year-on-year.

Irdai has formed a committee to ensure a seamless transition for all Sahara India Life’s 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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Updated: 02 Jun 2023, 07:52 PM IST


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