The Insurance Regulatory and Development Authority (IRDA) is examining the proposal from Reliance Life Insurance to rope in Japanese insurer Nippon Life Insurance Company as a strategic partner with 26 per cent stake.
“We received an application from them, I think, yesterday. We are examining it,” Mr J. Hari Narayan, Chairman, IRDA, told Business Line here on Wednesday.
On Monday, Nippon Life signed an agreement with Reliance Capital, of which Reliance Life is a wholly-owned subsidiary, to acquire 26 per cent stake for Rs 3,062 crore.
When asked whether there was any merger proposal from Reliance General Insurance and Royal Sundaram General Insurance Company, the Chairman said: “Yes. They want to merge.”
The regulator is likely to take a call on the merger proposal soon.
“We have brought draft guidelines on mergers of general insurance companies. The IRDA board will meet shortly to finalise the guidelines which will be notified subsequently,” he added.
The merger proposal of Reliance General Insurance and Royal Sundaram General Insurance Company will be examined in accordance with the final guidelines, Mr Hari Narayan added. The draft guidelines, announced last month, states that the transacting parties should ensure a proper migration of policyholders (of the transferor entity in case of a merger with another company) so that their existing policies continue to be serviced (by the transferee entity) on terms and conditions no less favourable than those existing before the merger.
On valuations, the IRDA said it could appoint an independent actuarial consultant to carry out valuation of the insurance business of the transacting parties.
The Reliance General and Royal Sundaram General merger proposal, if approved, would herald consolidation in the non-life sector. At present, there are 21 players in the general insurance sector, with most of them struggling to make profits.
COMPLAINTS
On the state of complaints from policyholders, the IRDA chief said things have been changing since the launch of IRDA's exclusive call centre for grievance redressal in July last.
“The number of complaints had gone up, which is a good sign because people are now forthcoming,” he said.
Earlier, the number of complaints was about 5,000 a year. But the regulator had already received about 15,000 till date this year.
“Most of them are related to administrative/service-related aspects. And about 15 per cent of them are related to claims,” he said.