Page 22 - Life Insurance Today OCTOBER 2017

Sahara Life is

dying what

happens next?

T he policyholders of Sahara India Life Insurance submit the valuation report, which will be reviewed by us
Co. Ltd (Sahara Life) may soon be dealing with
for approval,” said Sathe. According to Sandeep Batra,
executive director ICICI Pru Life, the insurer will make a final
a new insurer—ICICI Prudential Life Insurance
Co. Ltd (ICICI Pru Life), which has expressed
interest to take over the life insurance business of Sahara proposal to the regulator post the evaluation.
Life. Around 3 weeks ago, the Insurance Regulatory and Though Sahara Life will be no more, its 350,000
Development Authority of India (Irdai), for the first time policyholders need not worry. Why? We will explain in
in its existence, took over the administration of a life detail, but first a little background on Irdai’s decision to
insurance company. transfer Sahara Life’s insurance business to another insurer.

Irdai believed that Sahara Life was acting against Policyholders’ interest
policyholders’ interests. Subsequently, it offered six
The regulator pointed to three major infractions in its order
insurers—namely: Life Insurance Corporation of India, ICICI
dated 12 June. The first was about serious lapses in
Pru Life, HDFC Standard Life Insurance Co. Ltd, Bajaj Allianz governance, the second was with regard to its declining
Life Insurance Co. Ltd, Kotak Mahindra Old Mutual Life
business and the third was the fact that Irdai had observed
Insurance Co. Ltd and SBI Life Insurance Co. Ltd—a chance
a significant increase in expenses.
to take over Sahara Life’s insurance business and directed
the company to not issue new policies. For instance, its security and other deposits increased from
Rs10 lakh to Rs71.34 crore in FY15, which further increased
In a letter dated 23 June, Irdai directed the insurer to close to Rs78 crore in FY16. According to the insurer, this expense
its business with immediate effect and inform its was towards expansion and opening more branches, but
intermediaries to not issue any fresh policies. The insurer, the regulator said that it had not given any approval for the
however, will continue to collect renewal premium and same.
service the existing policyholders. However, the circular
effectively winds up Sahara Life and according to Nilesh Further, as per the order, the insurer did not respond to
Sathe, member, life, Irdai, the process of valuation by ICICI Irdai’s concerns in a timely fashion. And when it did, the
Pru Life has already commenced. “ICICI Pru Life has agreed response was not satisfactory. Sahara Life admitted to Irdai
to take over the policyholders’ liabilities of Sahara Life and there was a lot of chaos for 2 years starting FY15. The
has already commenced valuing the liabilities of insurer said that its key persons—like the chief financial
policyholders and earmarking the matching assets of officer, appointed actuary, company secretary and
Sahara Life. compliance officer—resigned in FY15, which resulted in key
persons being absent from management. Further the
They will transfer on their books policyholders’ liabilities chairman of its board, Subrata Roy, was in judicial custody
and corresponding assets. We have given them 3 weeks to and new people were not willing to join the company.

Do not seek to follow in the footsteps of the men of old; seek what they sought.

22 October 2017 Life Insurance Today

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