The Insurance Regulatory and Development Authority of India (IRDAI) has received a whistleblower complaint alleging a conflict of interest involving WestBridge Capital, a private equity firm. The complaint claims that WestBridge Capital holds a significant stake in two insurance companies, Star Health and Kiwi General Insurance, which operate in the same segment of retail health insurance. This is in violation of IRDAI regulations, which prohibit a single promoter from holding a stake of 25% or more in two entities within the same business line.
According to the complaint, WestBridge Capital holds approximately 40% stake in Star Health and around 60% in Kiwi General Insurance, effectively making it the promoter of both companies. IRDAI regulations, specifically the IRDAI (Registration of Indian Insurance Companies) Regulations, 2022, state that a holding of 25% or more qualifies as a promoter-level interest, and the same promoter cannot hold such stakes in two entities within the same business line.
In response to the complaint, IRDAI has asked its officials to explain why the conflict of interest was not previously disclosed to the board. The regulator plans to engage with WestBridge Capital to explore possible resolutions, including reducing its stake in Star Health below 25% to shift from a promoter to an investor role. Other options being considered include introducing conditions on Kiwi’s approval process, such as restricting its entry into retail health insurance or other overlapping segments, or stopping the approval for Kiwi General Insurance altogether.
The issue raises concerns about the potential conflict of interest and the impact on the insurance market. IRDAI’s response will be closely watched, as it will set a precedent for how the regulator handles similar situations in the future. The complaint also highlights the importance of transparency and disclosure in the insurance industry, and the need for regulators to ensure that companies comply with regulations to maintain a level playing field.