But thats only as far as the parties to the deal are concerned. For policyholders of AMP Sanmar, the acquisition does nothing much. They have no reason to celebrate. To the extent that some of the uncertainty over the future of AMP Sanmar has lifted (the acquisition is yet to get regulatory approval), they are certainly better off than before. But not significantly. And thats where the role of the insurance regulator, the Insurance Regulatory and Development Aut-hority (Irda) comes in.
It is Irdas responsibility to see that policyholders of AMP Sanmar do not suffer on account of the sellout by the company. Unlike subscribers to a mutual fund (MF) who have the option of exiting by selling their units in the market when an asset management company (AMC) changes hands, holders of insurance policies cannot exit even if they are unhappy with the new management. They are locked in for the period of the policy. Agreed, MF subscribers may often be forced to sell at a loss if the market perception of the new AMC is not favourable. But even this option is not available to insurance policyholders.
As an insurer, AMP Sanmar has a fiduciary responsibility. Therefore, it is not enough that it finds a buyer. The new buyerin this case Reliance Capitalmust satisfy the regulator that it is fit and proper, to use the jargon favoured by regulators, before it approves the deal. Irda must ensure that, post-acquisition, the new company will be able to honour whatever commitments AMP Sanmar had made to its policyholders. If it fails in that task, the future of private sector insurance in the country will be a bleak one indeed!