IRDA Asks Reliance Health Insurance to Transfer Entire Portfolio to Reliance General Insurance
Moneylife Digital Team 07 November 2019
The Insurance Regulatory and Development Authority of India (IRDA) has asked Reliance Anil Dhirubhai Ambani group (ADAG) company Reliance Health Insurance Ltd transfer its entire portfolio to Reliance General Insurance following sharp reduction in net worth, investments and bank balance in the health insurer.
 
In an order, the regulator has asked Reliance Health Insurance to transfer to Reliance General Insurance on 15 November 2019 its entire health insurance portfolio, all investments pertaining to policyholders and those lying in shareholders' accounts, bank balance and cash in hand, premium collected by agents and branches and any other financial assets. Reliance Health Insurance has been asked to inform through a notice all policyholders about transfer of its entire portfolio to Reliance General Insurance.
 
 
Reliance General Insurance, on the other hand is directed by IRDA to keep all assets and liabilities of Reliance Health Insurance separate from its general insurance business and report it as separate line of business. Reliance General Insurance should promptly settle claims arising out of Reliance Health Insurance portfolio and display the procedure for this on its website and on the notice board at offices and branches, IRDA had said.
 
According to the insurance regulator, Reliance Health Insurance was granted a certificate of registration in October 2018 and within a year, its solvency fell to 63% as on September 2019 from 106% on 30 June 2019. Section 64VA(3) of the Insurance Act requires an insurer to maintain control level of solvency at 150%.
 
In its submission, Reliance Capital Ltd, the promoter of Reliance Health Insurance admitted to violations of provisions under Section 64VA(1) and 64VA(3) of the Act. While affirming that Reliance Health Insurance had sufficient assets to cover policyholders' liabilities, Reliance Capital informed IRDA that the proposed induction of a new promoter or investor was not proceeding as envisaged and it would submit a detailed plan to merge Reliance Health Insurance with Reliance General Insurance. 
 
"Given the fact that the solvency of Reliance Health Insurance is considerably below the control level of solvency and based upon the submissions made by Reliance Health Insurance and Reliance Capital, the promoter, the Authority has come to the conclusion that continuation of health insurance business by Reliance Health Insurance at this junction will not be in the interest of the policyholders," the order from IRDA says.
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