Troubled insurer Reliance Health Insurance has received an order from Indian regulatory authority to stop selling policies in the country.
The Insurance Regulatory and Development Authority (IRDAI) has also mandated the company to transfer policyholders’ liabilities and financial assets to Reliance General Insurance.
The order, set to become effective from 15 November this year, comes after the insurer failed to maintain required solvency margins since June this year.
Earlier, Reliance Health Insurance was warned by the regulator to improve solvency levels. However, the insurer failed to comply.
A part of Reliance Capital, Reliance Health Insurance was segregated from Reliance General Insurance (RGIC) as a separate entity last year.
Solvency margins refer to the difference between the company’s asset strength and its liabilities.
According to stipulated regulations, health insurers should maintain a 150% solvency margin. According to Livemint, Reliance Health Insurance’s margin plummeted from 106% to 77% between June and August.
The figure slipped further to 63% in September.
Last month, the insurer’s sole promotor Reliance Capital admitted to breaches and said its plans to again merge the company with RGIC.
It noted that the delay in the process to induct a new investor in the company as the reason for amalgamation.
The IRDAI noted that the troubled insurer’s current assets are adequate to meet existing policyholders’ claims.
RGIC will start handing the claims from 15 November.