Go Digit faces IRDAI show-cause notice over excess expenses in FY24
For the six months ending September 30, 2024, Go Digit's expenses exceeded the regulatory limits set by the insurance regulator. To address this, the company has applied for a 3-year forbearance starting April 1, 2023.
Go Digit General Insurance reported on Thursday that its expenses related to running the insurance business have exceeded the regulatory limits set by the Insurance Regulatory and Development Authority of India (IRDAI).
The insurance regulator issued a show-cause notice to Go Digit, dated October 18, 2024, related to the excess expenses incurred during FY2023-24. Go Digit is in the process of responding to the notice, it said.
IRDAI (Expenses of Management, including Commission of Insurers) Regulations, 2024 cap the amount insurers can spend on business operations, including commissions and other management expenses, to promote financial discipline and protect policyholders' interests.
For the six months ending September 30, 2024, Go Digit surpassed these regulatory limits. To address this, the company has applied for forbearance—a temporary exemption from regulatory requirements—for a three-year period starting from April 1, 2023. This application is currently under review by IRDAI, the company said.
The motor insurance segment, which remains the largest contributor to Go Digit’s overall business, posted premiums of Rs 1,354.21 crore in Q2 FY25, a 10.22% increase from Rs 1,228.65 crore in Q2 FY24. However, underwriting losses in the motor segment widened by 17.71% YoY to Rs 245.11 crore in the quarter.
Most of Go Digit's profits came from relatively smaller segments, including fire, marine, health and crop insurance.
Corporate group health insurance swung to a profit of Rs 24.3 crore for the quarter from a loss of Rs 32.08 crore in the year-ago period. However, the company noted, "In view of the seasonality of the Industry, the financial results for the quarters are not indicative of the full year's expected performance."
Meanwhile, crop insurance turned in a profit of Rs 13.18 crore in Q2 FY25 from Rs 2.46 crore in the year-ago period.
Edited by Jyoti Narayan