To make things smoother, this M&A is planned in two stages. In the first stage, HDFC Ergo will acquire the company by purchasing a 100% stake. Current L&T Insurance Policyholders might expect a name change during this phase. However, it won’t affect the way they have been dealing with their policies. The second phase will entail the complete merger after the high court and other regulatory consents. Once essential formalities are fulfilled, all the business will curtail into one entity — the HDFC ERGO brand.
This alliance will also include re-looking at certain products as HDFC Ergo may want to discontinue the products with similar features and retain those with unique benefits for the advantage of the policyholders. This merger and the subsequent rationalization of products might impact the premiums, however, no decisions will be taken without the IRDA approvals. The current plans of both the companies continue on their existing terms till their renewal.
One area the policyholders might be concerned about is the Claim Processing. However, there’s no need to worry as this merger might not significantly affect the way claims are being currently handled. L&T’s Motor and Home insurance claims will continue to be managed in a similar manner. However, for health claims, L&T’s Third Party Administrator will continue to service them only till the renewal of the policy. As HDFC Ergo has in-house Claims team, the L&T policyholders will then onboard with HDFC Ergo.
For policyholders, this merger might prove to be advantageous. HDFC Ergo & L&T Insurance — both have a strong network of cashless hospitalization and workshops for motor insurance. Hence, this alliance will bring about the higher efficiencies regarding operational and customer service excellence rendering into better servicing and more comprehensive products.
While for HDFC Ergo, this merger indicates an expansion by encashing the infrastructure and innovative products by L&T Insurance and its distribution channels, the policyholders can expect a better after-sales service, comprehensive products and a larger network for cashless transactions during the claims.