The troubles of Anil Ambani-led Reliance group continued with the Insurance Regulatory and Development Authority of India (IRDAI) ordering Reliance Health Insurance to stop issuing policies forthwith and transfer the entire policyholders’ liabilities, along with financial assets, to Reliance General Insurance Co (RGICL) with effect from November 15, 2019. This decision by IRDAI has been made following the regulator getting to know that Reliance Health Insurance has not been able to maintain the solvency margin of 150% which is mandatory.
The interesting part is IRDAI says Reliance Health Insurance has been below the solvency margin since June 2019 but the regulator came to know about this only towards the end of August 2019. Immediately, the company was told to take remedial action and was given a month’s time for this. It is reported that the solvency margin which stood at 106% as on June 30, 2019 fell steeply to 77% on August 31, 2019 and further below to 63% on September 30, 2019.
Based on these figures, the IRDAI has taken the decision that the situation cannot continue and it can only be damaging the interests of the policy holders. This is the reason behind directing Reliance Health Insurance to stop issuing policies.
Now, the company will have to transfer all the liabilities on the policies already issued to Reliance General Insurance (RGICL) and where there are claims from the policy holders, those will have to be promptly attended to. IRDAI has said it will be closely monitoring the proceedings. Ultimately, the interests of the policy holders must be protected, which is one of the key objectives for which the IRDAI exists.
The order finally states that if any of the companies involved, Reliance Health Insurance, Reliance General Insurance Company or Reliance Capital Limited, the holding company, feel aggrieved by this order, they can approach the Settlement Appellate Tribunal (SAT).