Money & Banking

HDFC ERGO General keen to consolidate health insurance play

KR Srivats New Delhi | Updated on February 06, 2020 Published on February 06, 2020

Ritesh Kumar, MD & CEO, HDFC ERGO General Insurance Company.

Merger with group’s health insurance arm to be completed in 2020, says MD & CO Ritesh Kumar

HDFC ERGO General Insurance expects to merge the HDFC Group-acquired HDFC Ergo Health Insurance (erstwhile Apollo Munich Health Insurance) with itself within this calendar year.

Once the merger is completed, HDFC ERGO General Insurance will become a predominantly health insurance company in the Indian market and benefit from enhanced geographical and distributional reach in about 600 districts, its MD & CEO Ritesh Kumar told BusinessLine.

To move NCLT for approval

An application for the proposed amalgamation will be soon moved with the National Company Law Tribunal (NCLT), he added.

Currently, mortgage lender HDFC holds a controlling interest in both HDFC ERGO General Insurance and HDFC ERGO Health Insurance.

Two-stage deal

The entire transaction is being done in two stages. Early last month, HDFC had acquired a majority stake in Apollo Munich Health Insurance from the Apollo Hospitals Group for ₹1,485.14 crore, and an 0.36 per cent shareholding held by employees for ₹10.67 crore. The second phase would entail the merger of the two entities controlled by HDFC.

“We are hoping that in the next week to 10 days we (both the entities) should be able to apply. It will go through the NCLT procedure and we hope to get the approval in the next two quarters,” Kumar said.

Once the NCLT gives its approval, a final approval has to be received from insurance regulator IRDAI. So far, IRDAI has only given a provisional approval; it cannot give the final approval till the NCLT gives its nod for the merger, according to Kumar.

Likely merger benefits

Outlining the benefits that would accrue to HDFC ERGO General Insurance from the proposed merger, Kumar said it would bring in economies of scale benefits to customers and offer the entire bouquet of products under one umbrella.

He also said that the two million policyholders of the erstwhile Apollo Munich Health Insurance will have continuity on their existing policies and existing health cards — there will be no change in policy wordings, policy benefits, or claims processes.

Apollo Munich Health Insurance had a network of 5,000 hospitals (for cashless claims) and this network has, post deal, been enhanced to 10,000 hospitals, he added.

“As we speak, we have got all the hospitals empanelled with HDFC ERGO Health. Policyholders of Apollo Munich will now have the benefit of an extended network of hospitals — 10,000 hospitals in all in 650 cities,” Kumar said.

As of end-March 2019, 23 per cent of the overall business of HDFC ERGO General Insurance was accounted for by the health and accident segments. Once the two entities are merged, as much as 39 per cent of the overall business premium will come from accident and health .

Health insurance is expected to continue to be the fastest growing segment in the non-life insurance segment in the coming years. There is still a significant level of under-penetration of health insurance in the country, Kumar said.

Published on February 06, 2020
This article is closed for comments.
Please Email the Editor