Less than two months after appointing an administrator to manage the affairs of Sahara India Life Insurance (SILIC) and acting on a report from the official, Insurance Regulatory and Development Authority of India (IRDAI) has directed ICICI Prudential Life Insurance to take over the life insurance business portfolio of the beleaguered SILIC effective July 31.
“This order is binding on all persons concerned and shall have effect notwithstanding anything in the memorandum or articles of association of Sahara India Life Insurance Co. Ltd.,” the IRDAI said in a directive.
IRDAI had, on June 12, appointed its General Manager (F&A-NL) R.K. Sharma as administrator for the Lucknow-based Sahara India Life Insurance.
Ten days later, based on the administrator’s report, it directed the insurer not to procure or collect proposal deposits or underwrite new business with effect from June 23.
“The report of the administrator indicated that there is total failure of the governance system of Sahara India Life Insurance and the interests of the policyholders are at stake,” IRDAI said.
The report said: “The promoters of the company are no more fit and proper. A sum of ₹78 crore has already been siphoned off in name of security deposits; the shareholders and board of directors are not keen in recovery plan; and the company is mainly surviving on the release of reserves. However, the situation may not continue for long as the new premium of the company has come down significantly.”
IRDAI chairman T.S. Vijayan, in the order, said based on their representation, the chairman and independent director of Sahara Life Insurance and Sahara Group chairman were called for a meeting on July 24. The company, however, did not bring any new facts or information, to warrant revisiting of the orders of the Authority issued with regard to appointment of the Administrator. Based on the facts reported by the Administrator in his June 22 report, the Authority has come to the “conclusion that continuation” of Sahara Life Insurance to “transact life insurance business is not in the interests of the holders of life insurance policies in general and accordingly consider it to be a fit case to transfer the portfolio to some other insurer.”
IRDAI also directed ICICI Prudential Life to issue a public notice confirming the takeover and informing Sahara India Life Insurance policyholders of the manner in which the policies will be serviced after July 31.
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