5 Jun 2023 , 09:32 AM
The transfer of Sahara Life’s assets and liabilities, which total roughly two lakh policies, is not expected to significantly affect SBI Life Insurance because the latter’s company is so small, according to a news report. A corporate spokesperson mentioned that the overall number of policies being moved represents a very minor portion of SBI Life’s total number of policies.
According to the news report, capital associated with plans based on actuarial calculations is also being transferred to SBI Life at the same time.
Additionally, the report mentioned that depending on the age profile of the new policyholders, SBI Life may have an opportunity to market their products.
The report predicted that SBI Life might not be heavily impacted and added that the company is serving as a test case for the sector as a whole since it allowed private players in 2000.
On Friday, the regulatory body IRDAI ordered SBI Life Insurance to assume the assets and policy liabilities of the financially troubled Sahara India Life Insurance Co Ltd (SILIC). There are around two lakh policies in question.
The decision was made during a meeting of the Insurance Regulatory and Development Authority of India (IRDAI) due to SILIC’s declining financial situation.
The regulator stated, ‘SILIC has failed to comply with the directions of the authority and take any affirmative steps to protect the interests of its policyholders, despite being given ample opportunities and sufficient time to ensure compliance.’
Furthermore, SILIC policy data indicates a run-off pattern in the corporation’s portfolio. Escalating losses and a larger percentage of claims compared to total premiums have worsened the financial situation.
IRDAI explained, ‘If the trend is allowed to continue, the situation will worsen and lead to capital erosion, and SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders.’
Considering all the relevant facts and circumstances, action has been taken against SILIC.
The authority further stated that the measure was necessary to safeguard the interests of SILIC policyholders in its meeting on June 2, 2023.
IRDAI assured that it will monitor the situation and provide any necessary guidance to benefit SILIC policyholders.
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