As per the recent IRDAI guidelines, a bank in its capacity as a group organiser may have group insurance arrangements with any number of insurance companies for the insurance needs of its customers.
The group health insurance policyholders of certain public sector banks (PSBs), which are going to be merged, need not worry about the servicing of their insurance policies. The Insurance Regulatory and Development Authority of India (IRDAI) has issued guidelines on group health insurance policies, to be followed, upon the merger of public sector banks. The guidelines make it clear that even after the merger of banks, the policies will continue to be serviced by the respective insurance company till the end of the policy period.
There were several PSBs which have been merged or amalgamated leading to a consolidation in the banking sector. Vijaya Bank and Dena Bank are amalgamating with Bank of Baroda and the name of the amalgamated entity will be Bank of Baroda. Similarly, Oriental Bank of Commerce and United Bank of India are amalgamated with Punjab National Bank (PNB). Further, Syndicate Bank is merging with Canara Bank. Andhra Bank and Corporation Bank are going to be merged with Union Bank of India while Indian Bank will merge with Allahabad Bank.
Consequent to the merger of the PSBs, in order to protect the interests of the group insurance policyholders of the merged banks, the IRDAI has issued the guidelines to be followed by the banks and insurance companies in the interest of the policyholders.
After the merger of the PSBs, the respective insurance company will continue to service the policy until the end of the policy period. The insurance companies will make suitable arrangements with the acquiring banks to this effect. The means the policyholder will not be facing problems regarding the servicing of the policy.
At the end of the policy period of the group insurance policy of the merged bank, the acquiring bank at its option may continue with the same group insurance policy with the same insurance company, for the customers of the merged bank.
Further, the acquiring bank may simultaneously continue to have insurance coverage for its existing customers with its existing insurance company. The acquiring bank can also, offer this insurance coverage to the customers of the merged bank with the consent of its insurer.
As per the recent IRDAI guidelines, a bank in its capacity as a group organizer may have group insurance arrangements with any number of insurance companies for the insurance needs of its customers.
IRDAI also allows that the arrangements of the merged banks can be continued with the respective insurance companies for a period of twelve months from the date of the merger, subject to the willingness of the acquiring bank to function as the corporate agent for the respective insurance companies.
With the guidelines in place, the individual account holders of the merging PSBs are expected not to suffer as far as servicing of their health insurance coverage is concerned.