IRDA’s vigilance through the consolidation in the insurance industry is undoubtedly a relief to policyholders. See how the apex body is safeguarding the customers' interests.
According to a bureau report by Economic Times, HDFC Standard Life and Max Life have been discussing about their merger while on the other hand, HDFC Ergo has been initiating talks of acquiring L&T General Insurance for a whopping Rs. 551 CR. Should such consolidations be a cause of concern for policyholders? Apparently, it shouldn’t.
The Insurance Regulatory and Development Association of India (IRDA) has strict protocols to ensure that the rights of policyholders are protected if even if a company is acquired. Under the Protection of Policy holder’s Interest rules, the insurance regulator can intervene and take over management if at all they feel the need to do it.
IRDA makes sure that there are less instances of a policy holder’s claim being dishonored by the acquiring insurance company. The claim solvency margin especially in life insurance should be 150%.
General insurance contracts (auto, health, and personal) are usually annual so it is easier to switch to another insurance provider. Sadly, that is not the case with life insurance.
Although policy, pricing, and claim settlements can have an impact with a change in ownership, insurers don’t change policy terms and pricing. If such a scenario occurs, policyholders can move on to a new insurer. Additionally, health insurance is portable, thus allowing policyholders to switch from one insurance provider to another.
A policyholder could shift for reasons such as price, customer service, product, etc. If it all a product is discontinued, the policyholder is given adequate time to switch to another insurer, thanks to the defined withdrawal process that has been laid down by IRDA.