The Insurance Regulatory and Development Authority of India (IRDAI), has taken a significant step to protect the interests of policyholders of Sahara India Life Insurance Company (SILIC).
SILIC, which has been facing financial and governance issues, will undergo a transfer of its life insurance business to SBI Life Insurance Company (SBI Life), one of the country’s largest life insurers.
The move aims to ensure the smooth transition of policies and safeguard the assets of around 200,000 SILIC policyholders.
The Need For Intervention
The decision to transfer SILIC’s life insurance business arises from the insurer’s failure to comply with regulatory directions and its deteriorating financial position. Previously, IRDAI had appointed an administrator to manage SILIC in 2017 due to concerns over financial propriety and governance issues. SILIC was also prohibited from underwriting new business.
According to IRDAI, SILIC’s portfolio has been experiencing a run-off trend, with rising losses and a higher percentage of claims-to-total premium. The regulator warned that if this trend continued, it could lead to capital erosion and hinder SILIC’s ability to meet its obligations towards policyholders. To prevent such a situation and protect policyholders’ interests, the IRDAI decided to take action.
Smooth Transition For Policyholders
IRDAI has taken necessary steps to ensure a seamless transition for all policyholders of SILIC. A committee comprising members with expertise in actuarial science, life insurance, and finance, and investment has been constituted to oversee the implementation of the transfer in a time-bound manner.
Efficient Servicing of Policy
SBI Life, as the acquirer insurer, will assume responsibility for the policy liabilities of SILIC with immediate effect. IRDAI has directed SBI Life to reach out to SILIC policyholders and establish a dedicated cell to address their queries and provide efficient servicing. By taking on the policy liabilities, SBI Life will secure the policyholders’ assets and ensure their continued coverage and financial protection.
IRDAI has emphasised its commitment to monitor the situation closely and issue further directives as necessary in the interest of SILIC’s policyholders. This ongoing oversight will help safeguard policyholders’ rights and ensure their long-term financial security.
IRDAI’s decision to transfer SILIC’s life insurance business to SBI Life reflects its dedication to protecting the interests of policyholders. By taking prompt action in response to SILIC’s financial and governance challenges, the regulator has taken a proactive approach to prevent potential losses and ensure the continued coverage and security of policyholders.
SBI Life’s role as the acquirer insurer will play a crucial part in the smooth transition process, ensuring that SILIC policyholders receive efficient and uninterrupted service.