ICICI Prudential to take over Sahara Life's insurance business
29 July 2017
ICICI Prudential Life Insurance Company Ltd will take over Sahara India Life Insurance Company Ltd, the insurance business of the beleaguered Sahara Group, with effect from 31 July, as directed by the Insurance Regulatory and Development Authority (Irdai).
Irdai on Friday issued an order in accordance with Section 52 B (2) of the Insurance Act, 1938, which states that ICICI Prudential should ensure that systems are integrated within a period of one year from the appointed date.
The order was issued after embattled Sahara group chairman Subrata Roy met Irdai chairman on Monday to seek more time to resolve the crisis at his life insurance arm.
Irdai had last month appointed an administrator to run the crippled Lucknow-based Sahara Life due to governance-related issues at the company. The administrator had since submitted a report stating that continuation of Sahara India Life to transact life insurance business is not in the interest of the holders of life insurance policies and that the life insurance portfolio of Sahara India Life may be transferred to some other insurer.
ICICI Prudential had, meanwhile, submitted a valuation report to the regulator to take over the company and Irdai has ordered transfer of Sahara Life to ICICI Prudential under section 52B (1) of the Insurance Act, 1938.
Irdai has allowed a 15-day moratorium to policyholders for payment of renewal premium, while ICICI Prudential has been given 21 days for settlement of claims, after which ICICI Prudential will carry on the servicing of policy holders of Sahara India Life unhindered.
ICICI Prudential will make available FAQs about servicing of policy holders of Sahara India Life. A dedicated call centre / e-mail ID will be created to handle the concerns of policyholders of Sahara India Life.
According to Irdai, the report of the administrator indicated that there is total failure of the governance system of Sahara India Life and the interests of the policyholders are at stake.
Promoters of the company are no more 'fit and proper', a sum of Rs78 crore has already been siphoned off in name of security deposits, and the shareholders and board of directors are not keen on recovery plan, the report said.
Moreover, the Irdai report said, the company is mainly surviving on release of reserves. The situation may not continue for long as the new premium of the company has come down significantly.
ICICI Prudential shall assume the insurance liabilities of Sahara India Life as per the valuation of the independent actuary as on the appointed date, the order said, adding Sahara India Life shall transfer the assets / investments to ICICI Prudential on irreversible basis.
While Irdai had approached several insurance companies, including Life Insurance Corporation of India (LIC) for taking over the running Sahara Life, except ICICI Prudential no other insurance company was willing to take over the assets and liabilities of Sahara India Life.
ICICI Prudential Life on Friday said in a statement that it has received an order from Irdai directing it to take over the assets and policyholder liabilities of Sahara Life Insurance.
The company, however, said it is not a merger between the two companies but purely a transfer of customers to ICICI Prudential Life.
''We are pleased to welcome the new customers to the ICICI Prudential Life family. We would like to assure them of high levels of service and commitment,'' it said.