Insurance regulator IRDAI has directed Edelweiss Life Insurance and Pramerica Life Insurance, in separate orders on August 20, not to open new place of business for six months for non-compliance with Expenses of Management (EoM) limits in 2024-25.

“The [two life] insurers were warned for their failure to remain within the prescribed EoM limits and directed not to open any new place of business…”, the Insurance Regulatory and Development Authority of India (IRDAI) said on Friday. The direction follows off-site monitoring, examination of the submissions, by the two insurers, and subsequent enforcement proceedings.

On August 19, it had barred Niva Bupa Health Insurance and Acko General Insurance from opening new branches for six months after finding both insurers exceeded the permissible EoM limits for 2024-25.

In a release, on the latest action, IRDAI said it has laid down strict expense limits for insurers. They are expected to operate within the EoM, which includes operational expenses and distribution costs, to ensure the expenses are managed prudently and the benefits of operational efficiencies are ultimately passed on to policyholders.

During 2024-25, Pramerica Life Insurance incurred expenses of ₹ 747.73 crore as against the allowable expenses under non-participating (including linked policies) segment of ₹609.94 crore, thus resulting in excess expenditure of ₹137.79 crore.

Against the allowable expenses under non-participating (including linked policies) segment of ₹494.09 crore, Edelweiss Life Insurance incurred expenses of ₹558.73 crore. Under participating segment, against the allowable expenses of ₹239.50 crore, the insurer incurred actual expenses of ₹264.81 crore resulting in total excess expenditure of ₹89.95 crore, IRDAI said.

Insurance regulator IRDAI has barred Niva Bupa Health Insurance and Acko General Insurance from opening new branches for six months after finding that both insurers exceeded the permissible Expenses of Management (EoM) limits for 2024-25.

They were “warned for failure to remain within prescribed EoM limits and directed not to open any new place of business for six months” from August 19 order, the Insurance Regulatory and Development Authority of India said on Thursday.

The two insurers were found to have exceeded the permissible EoM limits prescribed under the IRDAI (Expenses of Management, including Commission, of Insurers) Regulations, 2024, following off-site monitoring, examination of their submissions and subsequent enforcement proceedings, it said.

Niva Bupa incurred actual expenses of ₹2,652.12 crore against the allowable expenses of ₹2,403.75 crore, resulting in an excess expenditure of ₹248.37 crore. For Acko General the allowable expenses were ₹650.37 crore, while it incurred actual expenses of ₹985.15 crore, resulting in ₹334.78 crore excess expenditure.

IRDAI said the insurers had been warned for failing to stay within the prescribed limits, adding that EoM include operational and distribution costs. The regulator said insurers must adhere to these limits to curb excessive operating and management expenses and ensure that a reasonable share of the premiums collected is used to provide insurance coverage and settle claims. These limits are intended to protect policyholders from unnecessarily high premiums, promote operational efficiency and safeguard insurers’ financial stability and solvency, it added.

Reaffirming its commitment to ensuring insurers operate within the prescribed regulatory limits on expenses, IRDAI said it would continue to take appropriate supervisory and enforcement action in cases of regulatory non-compliance.

Intimating the stock exchange about the IRDAI order, Niva Bupa said it was evaluating the order and will take appropriate steps to safeguard the interest of stakeholders.