IRDAI bars Rel Health from selling policies

Mumbai:

IRDAI

on Thursday barred

Reliance Health Insurance

from selling policies, citing the company’s inability to improve its capital position. It will now be merged with another group company

Reliance General Insurance

.

Reliance Health has about 9,000 active policies and the interest of the policyholders will be protected, IRDAI said. On June 30, 2019, Reliance Health had reported a solvency ratio of 106% — below the regulatory requirement of 150%. It had further dipped to 63% by September 30. “Despite repeated follow-up, the insurer did not improve its capital. Thereafter, the insurer was issued a show-cause notice and given another opportunity to present its case,” said the regulator.

Reliance Health is part of Anil Ambani’s Reliance Group, which has been facing serious liquidity issues. Group company

Reliance Capital

in May was downgraded by CARE Ratings to just two notches above junk status over its looming debt. Reliance Capital then said that it would raise Rs 10,000 crore ($1.4 billion) from sale of assets towards meeting current liquidity issues and for future growth.

A Reliance Capital spokesperson said, “As proposed by Reliance Capital, the promoter company of Reliance Health (RHI) and Reliance General (RGI), RHI will transfer its health insurance portfolio covering all financial assets and policyholder liabilities to RGI. This process is being undertaken in consultation with IRDAI and has been approved.”

There will be no impact on policyholders due to this transition, which will begin from November 15, and customers will continue to avail the benefits according to policy terms.