IRDAI picks SBI Life Insurance as suitor for Sahara India’s life insurance

Insurance regulator IRDAI said on Friday that it has designated SBI Life Insurance as the acquirer of the life insurance business of Sahara India Life Insurance Co Ltd (SILIC).

SBI Life was required to take over policy obligations of approximately two of SILIC’s policies, backed by policyholders’ assets, with immediate effect. IRDAI issued an order to that effect on Friday.

IRDAI has also taken the necessary steps to ensure a smooth transition for all SILIC policyholders. A committee comprising one (actuarial) member, one (life) member and one (F&I) member has been set up to execute the order in a time-bound manner.

SBI Life has been directed to take appropriate steps to reach out to SILIC policyholders, in connection with the service of policies, including establishing a dedicated cell to address inquiries of SILIC policyholders, as well as posting the necessary details on their website.

IRDAI will continue to monitor the situation and issue necessary guidance as required for the benefit of SILIC policyholders, according to a statement from the insurance regulator.

SILIC was awarded the Certificate of Registration in 2004 to conduct life insurance business.

In light of some serious issues related to the financial ownership and governance aspects of the life insurance company, IRDAI appointed a Director to manage the business of the insurance company in 2017.

Nor was the insurance company allowed to underwrite new business. Subsequently, further directives were issued to the insurance company to meet regulatory requirements.

Despite ample opportunities and sufficient time to ensure compliance, SILIC has failed to comply with IRDAI’s directives and take any positive steps to protect the interests of its policyholders.

Furthermore, SILIC’s policy statements reveal that the company’s portfolio shows a runoff trend. The financial situation was deteriorating with high losses and a high ratio of claims to total premiums.

If this trend is allowed to continue, the situation will worsen and lead to capital erosion and SILIC may not be able to fulfill its obligations to its policyholders, thus endangering the interests of its policyholders.

After considering all the facts and circumstances, IRDAI determined at its Friday meeting that action is warranted to protect the interests of SILIC’s policyholders.

Accordingly, IRDAI has now decided to transfer the life insurance business of SILIC to SBI Life Insurance Company Limited (SBI Life), which is one of the largest life insurance companies in the country with satisfactory financial services.