The Insurance Regulatory and Development Authority of India has asked Reliance Health Insurance Company (RHCIL) to stop selling new policies
The Insurance Regulatory and Development Authority of India has asked Reliance Health Insurance Company (RHICL) to stop selling new policies and transfer the entire policyholders’ liabilities along with financial assets to Reliance General Insurance Co. Ltd (RGICL) with effect from November 15. Reliance Capital told FE Online that the IRDAI order will have no impact on policyholders.
In an official statement, IRDAI said that Reliance Health Insurance Company (RHICL) which commenced operations in October, 2018 has not been able to maintain the required solvency margin since June, 2019. The regulator had issued direction to RHICL after learning about the condition of the insurer in August 2019. “However, despite repeated follow-up, this has not been carried out so far. Thereafter, the insurer was issued a show-cause notice and given another opportunity to present its case,” the regulator said.
“As there has been no improvement but further deterioration in the financial position of RHICL, in order to protect the policyholders’ interest, IRDAI has now issued directions to the insurance company to (i) stop selling new policies and (ii) to transfer the entire policyholders’ liabilities along with financial assets to Reliance General Insurance Co. Ltd (RGICL) with effect from 15th November, 2019,” it added.
Reliance Capital responds
Commenting on the IRDAI order, a Reliance Capital spokesperson told FE Online, “As proposed by Reliance Capital, the promoter company of Reliance Health Insurance (RHI) and Reliance General Insurance (RGI), RHI will transfer its health insurance portfolio covering all financial assets and policyholder liabilities to RGI. This process is being undertaken in consultation with the Insurance Regulatory & Development Authority of India (IRDAI) and has been approved by the regulator.”
“There will be no impact on policyholders due to this transition which will begin from November 15, and customers will continue to avail the same benefits as per policy terms and conditions. Further, the process of amalgamation of RHI with RGI is being taken up and will be completed in due course. The decision has been taken in the best interest of policyholders and we are fully committed to servicing our customers,” the spokesperson said further.
RGI is one of the leading general insurance players in India with a strong customer service network. It achieved gross direct premium of Rs 6,252 crore and profit after tax of Rs 212 crore in financial year 2018-19. “Last year, RGI serviced over 14 lakh claims of varied nature including health claims,” the spokesperson said.
What IRDAI said
RHICL cannot use its assets for any payment other than claim settlement till November 15. ” It is estimated that the underlying assets are sufficient to meet the claims of the existing policyholders that may arise in future,” the regulator said. The regulator has assured policyholders of RHICL that “all their interests have been adequately protected and all genuine claims will continue to be duly honored.”
Meanwhile, RGICL has been asked to service the claims of RHICL policyholders “promptly and efficiently” from November 15, 20019. The regulator has said that it will closely monitor the situation to “ensure smooth transfer of the portfolio, settlement of claims and protection of the interest of the policyholders.”
RHICL has also been asked by the insurer to give notice to all existing policyholders “informing them about the transfer of the portfolio to RGICL; and the procedure to prefer claims to RGICL for settlement. The same shall also be published in two national widely circulated newspapers (one in English and the other in Hindi).”