General insurance companies intending to go for amalgamations are likely to be subjected to an independent valuation by the regulator.
In a Gazette notification of Scheme for Amalgamation and Transfer of General Insurance Business Regulations – 2011, Mr J. Hari Narayan, Chairman, Insurance Regulatory and Development Authority (IRDA), said an independent actuarial valuation of value of transacting parties would be done.
The encompassing assets, liabilities and solvency position of the companies involved could be done by the IRDA “at any time prior to granting final approval to the proposed scheme,” he said.
Giving primacy to the protection of policyholders' interest, the IRDA said that after the grant of in-principle approval of the amalgamation scheme, the copies of the proposed scheme should be kept open for inspection by the policyholders at the registered/corporate office besides uploading them on their respective Web sites.
“Such inspection and access to the documents should be kept open until the complete implementation of the scheme,” the notification said.
Notice of intention
Every application for merger should be preceded by a notice of the intention to make an application at least one month before the actual date of application.
This should be accompanied by a draft of the agreement for amalgamation and transfer of business, balance-sheets of each of the insurer involved, financial condition report, report on the scheme by an independent actuary and a note on how policyholders' interest would be protected, among others.
At present, there are 24 players in the general insurance segment. Of this, Reliance General Insurance and Royal Sundaram had already applied to the IRDA for merger.
“However, they will now have to apply to us again in line with the notified scheme,” Mr Hari Narayan told Business Line .