IRDAI issued Go Digit show cause notice on October 18 for exceeding regulatory limit for expenses related to the insurance business
IRDAI limits expenses of management (EoM) for general insurance at 30% of the gross premium written in the timeframe
Go Digit’s total operating expenses in the September quarter of 2024 rose 13.8% to INR 2,136.05 Cr from INR 1,876.54 Cr in Q2 FY24
Insurtech company Go Digit received a show cause notice from the Insurance Regulatory and Development Authority of India (IRDAI) for exceeding the regulatory limit for expenses related to the insurance business.
“The company’s expenses relating to the insurance business are in excess of regulatory limits, as specified in IRDAI (Expenses of Management, including commission of insurers) Regulations, 2024, for the 6 months ended September 30, 2024. The forbearance application, as available under the regulations, mode by the company for three year beginning from April 1, 2023 is currently under consideration with IRDAI,” Go Digit said in an exchange filing.
It added that it received a show cause notice from IRDAI on October 18, 2024 on the subject for the financial year 2023-24 and the company is in the process of responding to it.
IRDAI limits expenses of management (EoM) for general insurance at 30% of the gross premium written in the timeframe. For standalone health insurance companies, the limit is 35%.
Go Digit’s total operating expenses in the September quarter of 2024 rose 13.8% to INR 2,136.05 Cr from INR 1,876.54 Cr in Q2 FY24. Its gross written premium (GWP) increased 14.2% to INR 2,368.57 Cr in Q2 FY25 from INR 2,073.84 Cr in the year-ago quarter. Meanwhile, its profit surged 3X to INR 89.47 Cr from INR 27.69 Cr in the year-ago quarter.
This marks the second instance when the startup has come under the scrutiny of the insurance regulator. Prior to its IPO, IRDAI slapped a penalty of INR 1 Cr on Go Digit for non-intimation of change in conversion ratio of compulsorily convertible preference shares (CCPS) issued by its holding company Go Digit lnfoworks Services Private Limited (GDISPL) to FAL Corporation, one of the promoter.
In its recent financial disclosure, Go Digit said that it has paid this penalty.
Meanwhile, the insurtech company also said that its board has appointed Kamlesh Goyal as the non-executive chairman of the board for a period of five years with effect from October 24, 2024.
