In both the cases, the insurers failed to comply with limits on expenses of management, which comprises operating costs and commissions paid to agents and distributors, during fiscal year 2024-25, as per the IRDAI statement.Expenses for health insurers should not exceed 35 per cent of gross written premiums in a financial year.
The company is evaluating the order and will take appropriate steps to safeguard the interest of stakeholders, said Niva Bupa Health Insurance in a statement.
New Delhi: India’s insurance regulator IRDAI has barred Acko General Insurance Niva Bupa Health Insurance from opening new places of business for six months because of the breach of business expense limits known as expenses of management(EoM), the IRDAI said on Thursday.
In both the cases, the insurers failed to comply with limits on expenses of management, which comprises operating costs and commissions paid to agents and distributors, during fiscal year 2024-25, as per the IRDAI statement.
Expenses for health insurers should not exceed 35 per cent of gross written premiums in a financial year.
This is for the first time, the IRDAI had taken action on any insurance companies for exceeding EoM limit
The IRDAI, after examining return on expenses of management (EoM) of Acko General insurance for the financial year 2024-25, had noted that the actual expenses of the insurer exceeded the allowable expenses (EoM limits) by Rs.334.78 crore.
Similarly, on Niva Bupa Health Insurance, the IRDAI said on examination of revised return on expenses of management (EoM) of the insurer for the financial year 2024-25, it had noted that the actual expenses of the insurer exceeded the allowable expenses (EoM limits) by Rs.248.37 crore.
Earlier, the IRDAI had sought explanation from both the companies on Expense of Management (EoM) limits for financial year 2024-25 and the companies had made submissions to the IRDAI.
IRDAI issued an order on Wednesday whereby both the companies have been warned for not complying with the applicable EoM limits for the FY 2024-25 and has directed not to open new place of business for a period of six months from the date of order.
Acko General Insurance is in its seventh year of operations during FY 2024-25 and the insurer had already been granted forbearance during the first five years of its operations i.e from FY 2018-19 to FY 2022-23.
The IRDAI further noted that, in respect of FY 2023-24, the insurer has exceeded the EoM limits and its request for forbearance had not been acceded by the regulator.
The insurer has again exceeded the EoM limits during FY 2024-25. Against the allowable expenses of Rs.650.37 crore, the insurer incurred actual expenses of Rs.985.15 crore, resulting in excess expenditure of Rs.334.78 crore, the IRDAI pointed out.
Niva Bupa Health Insurance ,backed by UK-based international healthcare group Bupa, is evaluating the order and will take appropriate steps to safeguard the interest of stakeholders, said Niva Bupa Health Insurance in a statement.
“Further, it may be noted that the company is in compliance with the IRDAI (Expenses of Management,including Commission of Insurers) Regulations, 2024 (“EoM Regulations, 2024”) for the full financial year ended March 31, 2026 as well as for the period Q1 ended June 30, 2026 and is on track to ensure compliance with the said EoM Regulations, 2024 for the full Financial Year ending March 31, 2027,” the stand alone health insurer(SAHI) added..
Niva Bupa, , said it complied with the expense rules for fiscal 2025-26 and was on track to remain compliant in the current fiscal.
Intensifying competition in India’s insurance sector has pushed up distribution costs, with commissions rising across the industry.
IRDAI is seeking to reform how distributors are paid in an effort to curb mis-selling of policies and reduce high distribution costs in one of the world’s fastest-growing insurance markets.
Shares of Niva Bupa extended losses to close 1.3% lower after the announcement.
With inputs from Agencies