Reliance Health Insurance (RHI), a part of Anil Ambani-led Reliance Capital, has said it will transfer its health insurance portfolio covering all financial assets and policyholder liabilities to Reliance General Insurance (RGI), with effect from November 15. RHI, which started operations in October 2018, was carved out from the health business of Reliance General Insurance.
"As proposed by Reliance Capital, the promoter company of RHI and RGI, RHI will transfer its health insurance portfolio covering all financial assets and policyholder liabilities to the general insurance entity. This process is being undertaken in consultation with the IRDAI and has been approved by the regulator," a Reliance Capital spokesperson said.
The company claimed that 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. Reliance Health has been barred from using its assets for any payment, except claim settlement, before the amalgamation process begins.
"The decision has been taken in the best interest of policyholders and we are fully committed to servicing our customers," the spokesperson added.
The company has taken this decision after the Insurance Regulatory and Development Authority of India (IRDAI) asked Reliance Health Insurance to stop selling new products and transfer its liabilities to Reliance General Insurance. The IRDAI issued this directive after the agency observed that there has been consistent fall in the solvency margin of Reliance Health Insurance and it has not maintained the required margin since June 2019.
As per IRDAI norms, insurers must maintain 150 per cent solvency at all times. On the contrary to this, Reliance Health's solvency was at 106 per cent till June, which declined to 77 per cent by August and further slipped to 63 per cent by September, Moneycontrol reported.
"The insurer was issued a show cause notice and given another opportunity to present its case. As there has been no improvement but a further deterioration in the financial position of Reliance Health, IRDAI has now issued directions to the insurance company to stop selling new policies and to transfer the entire policyholders' liabilities along with financial assets to Reliance General Insurance," the IRDAI said in its order.
Reliance General Insurance has reported 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.
Edited by Chitranjan Kumar