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Last Updated : Jun 12, 2017 08:26 PM IST | Source: Moneycontrol.com

End of road for Sahara? Improve financials in 3 months or wind up: IRDAI tells Sahara Life

IRDAI said that the insurer has been acting in a manner likely to be prejudicial to the interests of life insurance policy holders.

In the first step to force Sahara Life to step up its financial performance, Insurance Regulatory and Development Authority of India (IRDAI) has appointed R K Sharma from the regulatory body as an administrator for the insurer with immediate effect. Regulatory sources said that Sahara Life will be given a maximum time of three months or else the insurer will be asked to wind up operations.

“Winding up will be the last step. Administrator were appointee because we found that the financials were not proper. Ultimately, it will have to be closed by the administrator, on the basis of the advice given by us,” said a senior IRDAI official.

IRDAI said that the insurer has been acting in a manner likely to be prejudicial to the interests of life insurance policy holders.

All the policies issued by Sahara Life will now be managed by an administrator. “It will be the endeavour of the Administrator to ensure the servicing of the policyholders and to manage the affairs of the insurer in as smooth a manner as feasible,” IRDAI said.

The administrator will conduct the management of the business of the insurer as per applicable provisions under the Insurance Act, 1938.

Proposals for insurance pending with the insurer would be processed as per the terms & conditions of proposal and a decision on the same would be communicated not later than 15 days from the date of receipt of the proposal.

As per their public disclosures, the insurer posted losses of Rs 4.57 crore for the third quarter ended December 31, 2016 as compared to a profit of Rs 3.05 crore posted in third quarter of previous fiscal. The insurer had earlier been issued warnings of non-compliance with respect to rural and social obligations which they had not fulfilled.

The insurer had collected new business premiums of Rs 44.68 crore for FY17, a rise of 3 percent over previous fiscal. However, they saw an almost 18 percent drop in the number of policies, as per data from the Life Insurance Council.

Policyholders have been advised that under the existing policies with the life insurer, it is necessary and important to pay the premiums when due for continuing full coverage under the policy and to avoid lapsation of the policy.

All the policyholders’ requests for settlement of claims and other benefits would be processed, as per respective terms & conditions of the policy, within a period of 30 days from the date of receipt of all requirements.

IRDAI has also clarified that the insurer would continue to offer all the policy servicing activities as per respective policy terms & conditions.

Sahara Life Insurance is 100 percent by Sahara Group and was incorporated in 2004. Sahara Life officials could not be reached for comment.

Sahara Group has been reeling under financial troubles ever since its chief Subrata Roy was arrested in 2014 in a case of non-refund of almost Rs 20,000 crore to investors. Sahara mutual fund's licence was cancelled by Securities and Exchange Board of India in 2015.
First Published on Jun 12, 2017 08:26 pm
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