The Insurance Regulatory and Development Authority of India has on Friday asked SBI Life Insurance Co to take over Sahara India Life Insurance Co’s (SILIC) business with immediate effect.

“The decision has been taken as Sahara Life failed to comply with directions of IRDAI and take any affirmative steps to protect interests of policyholders,” the insurance regulator said in a press conference.

“The financial position (of Sahara Life Insurance) has been deteriorating with rising losses and higher percentage of claims to total premium. If the trend is allowed to continue, the situation will worsen and lead to erosion of capital and SILIC may not be able to discharge its liabilities towards policyholders, thereby endangering the interest of its policyholders,” the release said.

SILIC collected total premium of Rs 61.44 crore in FY22, which represents 0.25% of SBI Life’s total premium.

In 2017, due to certain serious issues on the financial propriety and governance aspects of the insurer, the regulator had appointed an administrator to manage the business of SILIC.

The insurer was also not allowed to underwrite new business. Thereafter, further directions were issued to the insurer to meet the regulatory requirements.

In July 2017, the insurance regulator had issued similar kind of order of take over Sahara India Life Insurance Co’s business by ICICI Prudential Life Insurance Co Ltd with effect from Jul 31, 2017.

However, the Securities Appellate Tribunal in January 2018 had set aside the said order by insurance regulator.

SBI Life shall take over the policy liabilities of around 2 lakh policies of Sahara Life, which are backed by the policyholders’ assets with immediate effect, the release said.

The regulator has set up a committee comprising an actuary, Member (Life), and Member (Finance and Insurance) for the implementation of the order in a time-bound manner, the release said.

The order said that the shareholders’ investments will continue to be under the control and supervision of the administrator until IRDAI gives any further order.