Chennai, July 31 (IANS) The Securities Appellate Tribunal (SAT) on Monday provided one week relief to Sahara India Life Insurance Company Ltd against the order of insurance regulator IRDAI transferring its life insurance policy portfolio of ICICI Prudential Life Insurance Company Ltd.
In a statement, Sahara India Life said SAT, condemning the order of Insurance Regulatory and Development Authority of India (IRDAI), also raised serious objection against the order.
The SAT had ordered status quo till it completes hearing on August 7.
“The SAT is going to decide a landmark case in the liberalised Indian insurance industry. This is going to be an important case under the Insurance Act,” D. Varadarajan, a Supreme Court advocate specialising in company/competition/insurance laws, told IANS.
He said the status quo order was waiting to happen.
“The harsh and extreme order of IRDAI against Sahara India Life can be likened to a staged shooting by trigger-happy and over-zealous cops,” Varadarajan quipped.
“How far the IRDAI is justified in acting on the basis of the report of the administrator who happen to be its own employee will be decided by SAT,” he added.
“Not only a bias, even the likely would of bias in case of a harsh decision would raise many a eyebrows,” said Varadarajan.
On July 28, IRDAI had ordered transfer of Sahara India Life’s business portfolio to ICICI Prudential Life Insurance effective from July 31.
Last month, IRDAI had appointed its own official as an administrator of Sahara India Life. The administrator had initially ordered Sahara India Life to stop accepting new business.
The IRDAI had ordered transfer of Sahara India Life’s insurance business to ICICI Prudential Life based on the administrator’s report.
According to the statement, Sahara India Life felt that the order was passed to benefit a third party and in violation of the principles of natural justice.
“Existence of power is one thing while the mode and manner of exercise of that power is another thing. With its status quo order, the SAT would be inclined to examine the manner and method of exercise of power by IRDAI,” Varadarajan said.
Sahara India Life challenged the IRDAI action, stating that its business was continuously in profit and the company has been in absolute and strict compliance of all regulatory norms /directions issued by the regulator.
It argued that there has not been even a single case of any complaint of non-payment of any claim to any policy holder and though the regulatory requirement of solvency margin is only 1.5, Sahara India Life has been maintaining solvency margin of more than 8 which reflects the company’s sound financial health.
IRDAI had not even framed any scheme, to safeguard the interest of policy holders, which is a statutory requirement before transferring the business to ICICI Prudential, it said.
The order was passed in great hurry and there was neither any transparency in the action of IRDAI nor the legal provisions were complied with, Sahara India Life said.