According to The Economic Times and The Times of India, the Insurance Regulatory and Development Authority of India (IRDAI) has warned both Niva Bupa Health Insurance and Acko General Insurance for exceeding prescribed Expenses of Management (EoM) limits in FY25 and barred both insurers from opening new places of business for six months. The regulator has directed both companies not to open any new place of business for six months from August 19, 2026, and not to add any new branches during this period. The health insurance company is not allowed to open any new business as it has breached prescribed limits on expenses of management during the financial year 2024-25. As per The Economic Times, EoM includes costs such as operational expenses and distribution costs incurred by insurance companies.
As reported by The Economic Times, Niva Bupa's allowable expense for FY25 was ₹2,403.75 crore, while its actual expenses stood at ₹2,652.12 crore, exceeding the limit by ₹248.37 crore. According to the latest IRDAI order dated August 19, 2026, the insurer had not complied with the EoM limits specified at Regulation 6 read with Regulation 10, 11 & 19 of the EoM Regulations, 2024. The company had also exceeded its EoM limit in FY24, for which IRDAI had granted forbearance in December 2024. For FY25, Niva Bupa sought forbearance citing business expansion, investments in technology, brand transition, and efforts to achieve scale and improve customer centricity. However, IRDAI rejected the request, noting that the insurer had once again breached the prescribed limits. Similarly, Acko General Insurance exceeded its allowable expenses by ₹334.78 crore in FY25, with allowable expenses of ₹650.37 crore and actual expenses of ₹985.15 crore.
According to the company's disclosure to BSE on Thursday, Niva Bupa said it is evaluating the order and will take appropriate steps to safeguard the interests of stakeholders. The insurer stated that it was in compliance with the EoM Regulations, 2024 for FY6, ended March 31, 2026, as well as for the first quarter ended June 30, 2026. It added that it is on track to ensure compliance with the regulations for the full financial year ending March 31, 2027. The company emphasized that it is currently in compliance with the IRDAI (Expenses of Management, including Commission of Insurers) Regulations, 2024 for the full 2025-26 fiscal year, which ended on March 31, 2026 as well as for the April-June quarter of 2026. As per ZeeBiz, the health insurer said it has complied with the prescribed expense limits for the financial year 2025-26 and remains on track to stay within the regulatory limits during the current fiscal year. The order will now be placed before Niva Bupa's Board at its upcoming meeting, with the insurer required to provide IRDAI a copy of the minutes of the discussion within 15 days of the meeting.
As reported by CNBC TV18, The Economic Times, The Hindu BusinessLine, The Times of India, and ZeeBiz, shares of Niva Bupa Health Insurance Company Ltd closed at ₹83.05 each, down 1.18 per cent on BSE today, August 20. The regulatory warning comes after IRDAI had sought an explanation regarding EoM limits for FY25, following which Niva Bupa made submissions to the regulator. According to The Economic Times, IRDAI has prescribed limits to ensure insurers control management and operating costs so that a reasonable portion of premiums collected from policyholders is available for providing insurance cover and settling claims. The company's shares closed lower on the BSE following the announcement of the regulatory action, reflecting investor concerns about the six-month business expansion ban. For policyholders, the order relates to the insurer's compliance with regulatory limits on expenses of management, it does not state that existing health insurance policies have been cancelled or that policyholders' claims have been suspended.
Morgan Stanley views IRDAI's action on EoM non-compliance as positive for the sector, and it could ease competitive intensity, according to the latest brokerage analysis. The investment bank noted that Niva Bupa has since complied with the EoM limits in FY26 and the first quarter of FY27, and remains on track to meet the prescribed limits for FY27. Morgan Stanley emphasized that the regulatory action is important as it evaluates the insurer's compliance with the expense-related framework and the steps being taken to protect policyholder and stakeholder interests. The brokerage highlighted that EoM limits are designed to regulate the expenses that insurers incur in running their businesses, including costs linked to operations and distribution, keeping such expenses within prescribed limits is important as insurers scale their businesses while balancing growth with profitability. The action could encourage insurers to focus more closely on sustainable growth and operating efficiency, as aggressive expansion and distribution spending can help insurers acquire customers and build scale, but can also put pressure on profitability.
