IRDAI will now conduct a fresh review of the Sahara Life takeover and give a final decision.
A day after the Securities Appellate Tribunal (SAT) set aside the order of Insurance Regulatory and Development Authority of India (IRDAI) on the takeover of policyholder business of Sahara Life and asked for a review and a fresh order, a senior IRDAI official said that it was not mandated to submit the administrator’s report to the appellant.
SAT, in its judgement on Thursday, said that the administrator’s report and its outcome have potentially and adversely affected Sahara Life. It also added that IRDAI should have supplied a copy of the report to Sahara Life before passing the July 28, 2017 order transferring its businesses to ICICI Prudential Life Insurance.
However, Nilesh Sathe, member (life), IRDAI told Moneycontrol that there is no legal obligation for the regulator to submit the administrator's report to the appellant.
“We submitted it to the Tribunal as soon as we were asked to do so. The regulator will abide by the SAT's order and hear the appeal of Sahara Life afresh,” he added. The tribunal, has, however, upheld the decision of IRDAI to appoint an administrator to look into the affairs of Sahara Life.
Though information on Sahara India Life's total customer base is unavailable, the company had received a premium of Rs 432 crore from April to September, 2017. In the present fiscal, the company has sold 1,635 policies till December, a decline of 81 per cent over the same period last year. It had sold 16,058 policies in FY17.
IRDAI on July 28, 2017 had ordered the transfer of the life insurance portfolio of Sahara India Life to ICICI Prudential Life with a view to protect the interests of the policyholders of the embattled life insurer. After this, Sahara Life moved SAT and got a one-week reprieve.
Preceding this, in June 2017, IRDAI had appointed an administrator to look into the business of the insurer and later had instructed them to not write any new business. The regulator had said that the insurer has been acting in a manner likely to be prejudicial to the interests of holders of life insurance policies. It had also said that all the policies issued by Sahara Life will now be managed by an administrator.
RK Sharma, who was appointed Administrator in June for managing the affairs of the insurer, in his report to IRDAI said that the promoters of the company are no more ‘fit & proper’. Sharma had submitted the report in ...
“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,” Sharma said in the report.
However, Sahara Life had said at the SAT hearing that the order was passed with great 'impugnity,' to benefit a third party and in violation of principles of natural justice. It had also added that the decision was taken without affording any opportunity of hearing its part, and the Administrator appointed by IRDAI was acting in concert for the benefit of a third party, who recommended the other options but unilaterally recommended for transfer of business.
In a statement on late Thursday, Sahara spokesperson said that Sahara Life Insurance got a major respite from SAT when it remanded and restored the whole matter to the file of the IRDAI with a direction to proceed from the stage of seeking a representation/response from Sahara Life on the Administrator’s report in question.
IRDAI, will now, conduct a fresh review and take a final decision on Sahara Life Insurance in the next few weeks.Sahara Group has been reeling under financial troubles ever since its chief Subrata Roy was arrested in 2014 in a case of duping investors. Sahara Mutual Fund's licence was cancelled by Securities and Exchange Board of India the following year.