The recent order of the Insurance Regulatory and Development Authority of India (IRDAI) permitting ICICI Prudential Life Insurance company to take over the life insurance portfolio of Sahara India Life Insurance has ended a crisis in a remarkably speedy manner.

It took about six weeks for the insurer to douse a fire that could have threatened the interests of policyholders and dent the image of private life insurers among the general public.

The regulator took over the administration of Sahara Life on June 12, 2017, and finalised the allocation of its liabilities towards policyholders and corresponding assets to ICICI Prudential on July 28, asking it to take it over with effect from July 31.

While the whole episode has some takeaways, it also leaves some questions unanswered.

After resorting to the first-ever takeover of a private insurance company since privatisation of life insurance, IRDAI was able to tackle the matter without much confusion. The business related to claims settlement was not disrupted, though no new business premium has been accepted from customers since then.

There was neither commotion in the offices of Sahara Life Insurance nor panic among the policyholders. The experience of IRDAI Chairman TS Vijayan, who was a top executive of Life Insurance Corporation of India in his previous capacity, must have come in handy in this regard, feel some industry captains.

A CEO of a private insurance firm said that when the company was taken over by the IRDAI on June 12, it reminded some industry experts of the crisis at Satyam Computer in 2009.

In fact, the stakes in life insurance are much higher as the savings-cum-social security of policyholders are being dealt with.

The process of identifying a suitor on the basis of profits, absence of accumulated losses, solvency and prudent expenses management went on well and the choice of ICICI Pru could easily pass the scrutiny of a discerning eye.

According to the regulator, the takeover of Sahara Life was an imperative as “there was total failure of the governance system of Sahara Life placing the interest of policyholders at stake”.

The promoters of the company had already “siphoned off” ₹78 crore in the name of security deposits and there was no recovery plan in place.

While the action was speedy, it has to be seen if there was any delay in detecting the governance lapses on the part of the regulator given its focus on reports and audits of the insurers. The regulator could also review its early-warning systems further to avoid any recurrence of such crises.

IRDAI insists that it had given adequate time and opportunity to Sahara Group Chairman Subrata Roy to respond and present his case, but no new facts were presented by him which led to the takeover of the company by ICICI Pru.

Also, it is not clear if the transaction is sound enough to clear legal hurdles as the Sahara group is set to challenge the decision legally. It remains to be seen how things pan out in the days to come.

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