The company failed to comply with social sector obligation in FY 2012-13.
IRDA has imposed a fine of Rs. 5 lakh on Sahara India Life Insurance, a subsidiary of Sahara group, for non-compliance with social sector obligations.
The insurance regulator found that Sahara India Life failed to comply with the social sector obligation in FY 2012-13. The company has helped 31,500 social sector lives against its mandatory target of 35,000 lives falling short of some 3,500 lives. In the circular, IRDA said, “There is a shortfall of 3556 lives against its obligation in the eighth year of operation. This is considered in violation of the provisions of certain sections.”
Earlier, the insurance regulator had issued a show cause notice against the life insurer seeking response for the said violation. The company in its reply to IRDA attributed this shortfall to downward trend in the overall business. “Owing to the overall downward business trend there is a shortfall in the social sector business and that the social sector business constitutes 49% of the total business of the insurer in FY 2012-13,” said the company.
Sahara India Life assured IRDA that it will take necessary step to compensate the shortfall in social obligation in the coming years. However, IRDA replied that compliance to social sector obligation is a statutory mandate for all insurers.
The insurance regulator in its decision said, “The penalty of Rs.5 lakh shall be remitted by the life insurer by debiting the shareholder’s fund within a period of 15 days i.e. by August 8, 2014.” Also, IRDA has instructed the company to meet the unfulfilled part of social sector obligation in the current financial year.