Irdai has said that the interests of policyholders will be protected and all genuine claims will be honoured
In order to protect the interests of policyholders, the insurance regulator has ordered Reliance Health Insurance Co Ltd (RHICL) to stop selling new policies and to transfer the entire policyholders’ liabilities along with financial assets to Reliance General Insurance Co. Ltd (RGICL) with effect from November 15, 2019. This has been done because the standalone health insurance firm has not been able to maintain the required solvency margin since June 2019.
Solvency margin is the minimum margin of assets that an insurance company has to keep above its liabilities. The Insurance Regulatory and Development Authority of India (Irdai) requires all insurance companies to maintain a surplus of 1.5 times the liabilities. In case of RHICL, the solvency ratio was 106% as on June 30, 2019, which dropped to 63% as on September 30, which is below the control level of solvency of 150%. The company commenced its operations in October last year and has about 9,000 active policies as on date.
Regulator assures policyholders
The regulator has also prohibited RHICL from using 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’s note says. The regulator has also directed RGICL to service the claims of the RHICL policyholders promptly and efficiently with effect from November 15 and that it will be closely monitoring the situation to ensure smooth transfer of the portfolio, settlement of claims and protection of the interest of the policyholders. Irdai has assured RHICL policyholders that all their interests have been adequately protected and all genuine claims will continue to be duly honoured.
The regulator has directed RHICL to transfer to RGICL all the investments ofo policyholders and those lying in shareholders’ account, bank balance and cash in hand and cash/cheque lying with agents/branches of RHICL. Also, RHICL will give notice to all policyholders information them about the transfer of the portfolio to RGICL and the procedure for claims settlement.
On its part, RGICL will have to promptly settle claims arising out of RHICL portfolio and display the procedure claims settlement on its website. The regulator has directed that RGICL will not issue any new policy on behalf of RHICL nor shall it renew any policy from RHICL. However, the policyholders of RHICL will be given the choice of portability of their policies to other insurers including RGICL.