The Insurance Regulatory and Development Authority of India (IRDAI) has issued warnings to Edelweiss Life Insurance and Pramerica Life Insurance for breaching permissible expenses of management (EoM) limits during FY2024-25 and barred both insurers from opening new places of business for six months.
In separate orders dated 20 August, the regulator said the restriction on opening new branches or offices would remain in force for six months from the date of the orders.
The action follows similar restrictions imposed by the IRDAI a day earlier on Acko General Insurance and Niva Bupa Health Insurance for exceeding the permissible EoM limits during the same financial year.
In a release on the latest action, IRDAI said it has laid down strict expense ceilings for insurers. They are required to operate within the EoM limits, which include operational expenses and distribution costs, to ensure the expenses are managed prudently and the benefits of operational efficiencies directly benefit policyholders.
The regulator’s review of the insurers’ returns on EoM filings found that Pramerica Life incurred expenses of ₹7.48bn (US$78m) as against an approved threshold of ₹6.10bn in its non-participating (including linked policies) division, thus resulting in an overspend of ₹1.38bn.
Meanwhile, Edelweiss Life recorded ₹5.59bn in actual expenses against an allowed cap of ₹4.94bn for its non-participating segment. Within its participating segment, the company spent ₹2.65bn against a limit of ₹2.39bn, resulting in total excess of ₹899.5m.
