IRDAI has directed Reliance Health Insurance to stop selling health insurance policies with effect from November 15, 2019.due to continuous fall in its solvency margin & going down way below the mandatory levels set up by regulator.
IRDAI said Reliance Health Insurance which began operations in October 2018 has not maintained the required solvency margin since June 2019.
Reliance Health is part of Reliance Capital and was set up after carving out a separate entity from the health business of Reliance General Insurance.
The insurer was asked to restore the level of solvency in june 2019 & number of times thereafter, but could not comply.
IRDAI mandates that insurers must maintain 150 percent solvency at all times. Reliance Health’s solvency stood at 106 percent till June-end. It slipped to 77 percent by August-end and further to 63 percent by September-end.
The insurer was issued a show cause notice and given another opportunity to present its case but there was no improvement but a further deterioration in the financial position of Reliance Health, IRDAI issued directions to the insurer to stop selling new policies and transfer the entire policyholders’ liabilities along with financial assets to Reliance General Insurance.
The company has been prohibited from using its assets for any payment other than claim settlement. IRDAI will be closely monitoring the situation to ensure a smooth transfer of the portfolio, settlement of claims and protection of the interest of the policyholders.