IRDA directs Reliance Well being Insurance coverage to cease promoting new insurance policies

The Insurance coverage Regulatory and Growth Authority of India (Irdai) has directed Reliance Capital’s standalone medical insurance arm – Reliance Well being Insurance coverage – to switch its total portfolio to Reliance Common Insurance coverage, and barred it from promoting new insurance policies.

The regulator has additionally directed Reliance Well being Insurance coverage, which commenced operations in October 2018, to switch its monetary belongings in addition to all investments belonging to policyholders to Reliance Common with impact from November 15.

Irda famous that Reliance Well being Insurance coverage was dealing with solvency points, as its solvency margin was reported at 106 per cent within the June quarter (Q1FY20), which was effectively beneath the regulatory requirement of 150 per cent. Since then, the solvency margin has fallen to 77 per cent until August and 63 per cent in Q2FY20.

“After coming to the discover of IRDA in late August 2019, a path was issued to the corporate to revive the required degree of solvency margin inside a interval of 1 month. However even after repeated investigations, it has not been carried out to this point. Thereafter, a present trigger discover was issued to the insurer and the opposite was given a possibility to current his case”, IRDA mentioned.

“Given the truth that the solvency of Reliance Well being Insurance coverage is effectively beneath the management degree of solvency, the Authority has come to the conclusion that it could not be within the curiosity of Reliance Well being to proceed the transaction of medical insurance enterprise at this junction by the policyholder,” The insurance coverage regulator additional mentioned.

Reliance Capital, the holding firm of each Reliance Common and Reliance Well being Insurance coverage, proposed to merge Reliance Well being Insurance coverage with Reliance Common after it failed to usher in new buyers for its medical insurance arm.

A Reliance Capital spokesperson mentioned: “RHI will switch all monetary belongings and policyholder liabilities of its medical insurance portfolio to RGI, as proposed by Reliance Capital, the promoter firm of Reliance Well being Insurance coverage (RHI) and Reliance Common Insurance coverage (RGI). The method is being executed in session with IRDA and has been authorised by the regulator.

He additional added: “From November 15, Reliance Common will take over your entire portfolio of Reliance Well being together with its workers. Topic to essential approvals, the amalgamation will happen over a time frame. The merger is optimistic on the solvency of Reliance Common. Additionally, will probably be Reliance Common’s solvency. Provides Common the chance to do retail well being, which is the quickest rising phase of medical insurance.”

IRDA has additionally directed Reliance Common to separate the belongings and liabilities of Reliance Well being from its basic insurance coverage enterprise and report it as a separate enterprise. It has additionally been requested to settle claims arising from the portfolio of Reliance Well being, but it surely can not subject any new coverage on behalf of Reliance Well being, nor can it renew any from subsequent portfolios.

Nonetheless, policyholders may have the choice of portability of their coverage to different insurance coverage firms together with Reliance Common. IRDA has additionally requested Reliance Well being Insurance coverage to submit an motion plan on the merger inside a month of Reliance Common taking up its enterprise.

It was additionally determined by the events concerned that the remaining belongings of Reliance Well being can be put aside till the amalgamation with Reliance Common is terminated. And, until the merger, the working bills and funds to the collectors of Reliance Well being might be borne by the Promoter (Reliance Capital).

Reliance Well being has underwritten premium of Rs 6.14 crore within the first half of FY20 and has a market share of 0.01 per cent. It has written 9,000 insurance policies to this point.

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