IRDAI stops Reliance Health Insurance from selling new policies

The Insurance Regulatory and Development Authority of India has asked Reliance Health Insurance Company (RHCIL) to stop selling new policies. 

IRDAI has stopped Reliance Health Insurance from selling new policies. Representational Image

The Insurance Regulatory and Development Authority of India has asked Reliance Health Insurance Company (RHCIL) 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. In an official statement, IRDAI said Wednesday 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 RHCIL 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,” IRDAI 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.

According to the order, RHCIL 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 RHCIL 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.”

RHCIL 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).”

FE Online asked Reliance Health Insurance to respond on the IRDAI order. Their response is awaited.