NEW DELHI: Insurance Regulatory and Development Authority (IRDAI) has announced the closure of Reliance Health Insurance Company (RHICL) as the latter has not been able to maintain the required solvency margin since June 2019.
In a press release issued by IRDAI, it said that after the matter came to the knowledge of IRDAI in August, a direction was issued to RHICL to restore the required level of solvency margin within a period of one month. However, despite repeated follow-up, this was not carried out.
Following this, the insurer was issued a show cause notice to present its case. However, there has been no improvement but a further deterioration in the financial position of RHICL, therefore, in order to protect the policyholders’ interest, IRDAI has 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 Co. Ltd (RGICL) with effect from November 15, 2019, the press release said.
Until then, RHICL has been prohibited from using its assets for any payment other than claim settlement. It is estimated that the underlying assets are sufficient to meet the claims of the existing policyholders that may arise in future.
RGICL has been directed to service the claims of the RHICL policyholders promptly and efficiently from November 15, 2019. IRDAI will be closely monitoring the situation to ensure a smooth transfer of the portfolio, settlement of claims and protection of the interest of the policyholders.
In so far as policyholders of RHICL are concerned, the Authority would like to assure them that all their interests have been adequately protected and all genuine claims will continue to be duly honoured.