Irdai directs Sahara India Life Insurance to stop underwriting new business

After appointing an administrator to oversee Sahara India Life Insurance’s business, the Insurance Regulatory and Development Authority of India (Irdai) through a circular has directed the life insurance company to stop underwriting new business 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 / underwrite new business with immediate effect. Moreover, the company has been asked to inform all its agents and intermediaries of the decision so that they do not accept proposal deposits towards new insurance business.

However, Irdai has allowed the life insurance company to continue its business as far as its existing business is concerned as the existing policy holders should not experience any hindrance of service. They can also continue to accept renewal premiums from the existing policyholders.

The order issued under Section 52 (B) 2 of the Insurance act will be binding on all persons concerned, according to Section 52 (B) 3 of the Insurance Act,1938, said Irdai.

Earlier, Irdai owing to irregularities in the financial statements of Sahara Life Insurance had appointed an administrator after it reached a conclusion that the insurer is working in a manner which is 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.