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.