The Insurance Regulatory and Development Authority of India (IRDAI) has warned Acko General Insurance Ltd and Niva Bupa Health Insurance Co Ltd for exceeding the prescribed expenses of management (EoM) limits during FY24-25 and has directed both insurers not to open any new place of business for next six months. IRDAI found that Acko General Insurance exceeded the permitted EoM limit by ₹334.78 crore, while Niva Bupa Health Insurance exceeded it by ₹248.37 crore.
IRDAI's action follows its examination of the insurers' returns on expenses of management for FY24-25. Under Regulation 19 of the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, general and health insurers are required to keep their management expenses within the prescribed overall limits. Where an insurer exceeds the limit, the excess has to be charged to the profit and loss (P&L) account.
In the case of Acko General Insurance, IRDAI said the allowable EoM for FY24-25 was ₹650.37 crore, whereas the company incurred actual expenses of ₹985.15 crore. This resulted in excess expenditure of ₹334.78 crore. The insurer had charged the excess amount to its P&L account, as required under the regulations, but had sought forbearance from IRDAI for exceeding the prescribed limits.
Acko General Insurance told the regulator that its gross written premium (GWP) was lower than expected at ₹2,067 crore, against an anticipated ₹2,750 crore, owing to subdued industry growth. It also cited the impact of regulatory changes relating to 1/n premium recognition and said it had undertaken initiatives to reduce its EoM compared with FY23-24. The company had earlier sought forbearance from the regulator, with the General Insurance Council (GIC) recommending consideration of its request.
However, IRDAI noted that Acko General Insurance was already in its seventh year of operations in FY24-25. The regulator had previously granted the insurer forbearance for its first five years of operations, from FY18-19 to FY22-23. For FY23-24, Acko General Insurance had again exceeded the EoM limits, but its request for forbearance was not accepted. IRDAI observed that the insurer had once again exceeded the limits in FY24-25.
Consequently, IRDAI declined Acko General Insurance’s request for forbearance for FY24-25 and warned the insurer for failing to comply with the applicable EoM limits. Under Regulation 22(1)(b) and (c) of the EoM Regulations, 2024, Acko General Insurance has been directed not to open any new place of business for six months from 19 August 2026.
In a separate order concerning Niva Bupa Health Insurance, IRDAI found that the insurer's allowable EoM for FY24-25 was ₹2,403.75 crore, whereas its actual expenses were ₹2,652.12 crore, resulting in an excess of ₹248.37 crore. The excess amount was charged to the P&L account in accordance with Regulation 19.
Niva Bupa Health Insurance sought forbearance, citing its business expansion initiatives, increased presence, investments in technology and brand transition, efforts to achieve scale and leverage technology, cost-reduction measures and enhanced customer centricity. The insurer said these initiatives had helped it achieve faster year-on-year growth in gross written premium than the industry.
IRDAI, however, pointed out that Niva Bupa Health Insurance had also exceeded its EoM limits in FY23-24, for which the authority had granted forbearance under the EoM Regulations, 2023. The regulator noted that the insurer had again exceeded the applicable limits in FY24-25 and had not complied with Regulations 6, read with Regulations 10, 11 and 19 of the EoM Regulations, 2024.
The regulator therefore rejected Niva Bupa's Health Insurance request for forbearance and warned the company for its failure to ensure compliance with the applicable EoM limits.
As in the Acko General Insurance case, Niva Bupa Health Insurance has been directed not to open any new place of business for six months from the date of the order under Regulation 22(1)(b) and (c).
The regulator also directed both insurers to place the orders before the respective board of directors at their upcoming meetings, and the companies will be required to provide IRDAI with copies of the minutes of the discussions within 15 days of the meetings.
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