Stop underwriting new biz: Irdai to Sahara India Life Insurance

After appointing an administrator to oversee Sahara India Life Insurance’s business, the Insurance Regulatory and Development Authority of India (Irdai), through a circular, directed the insurer to stop underwriting new businesses with immediate effect.

Under Section 52 (B) 2 of the Insurance Act, 1938, the regulator has asked the company not to procure/collect proposal deposits or underwrite new businesses with immediate effect. Moreover, the insurer has been asked to inform its agents and intermediaries of the decision so they do not accept proposal deposits towards new insurance business.

However, Irdai has allowed the insurer to continue its business as far as its existing one is concerned so that existing policyholders don’t experience any hindrance of service. They can also continue to accept renewal premiums from existing policyholders.

The order will be binding on all persons concerned, according to Section 52 (B) 3 of the Insurance Act, 1938, said Irdai.

Earlier Irdai had, owing to irregularities in the financial statements of Sahara Life Insurance, appointed an administrator after reaching a conclusion that the insurer was working in a manner which was likely to be ‘prejudicial to the interests of the holders of the life insurance’. The action was taken according to Section 52 A of the Insurance Act.