The Insurance Regulatory and Development Authority of India (IRDAI) has directed Reliance Health Insurance Company (RHICL) 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, 2019.
IRDAI said RHICL, which began operations in October last, has not been able to maintain the required solvency margin since June 2019. The solvency ratio of RHICL had fallen to 63 per cent as on September 2019 and the difference between assets and liabilities had fallen to Rs 31.66 crore as against the stipulated Rs 50 crore.
After it came to the knowledge of IRDAI in the latter part of August, a direction was issued to RHICL to restore the required level of solvency margin within one month, IRDAI said. “… despite repeated follow up, this has not been carried out so far … insurer was issued a show cause notice and given another opportunity to present its case,” IRDAI said.