IRDA announces merger and acquisition norms for general insurance players; insurance miffed with certain norms and demand more clarity
General insurance players have been disappointed by a few proposed norms for merger and acquisitions announced by IRDA.
Insurance companies, looking for mergers, will now have to take the approval of the relevant high court or tribunal and if necessary from SEBI and CCI before securing the final nod from the insurance regulator. Insurers are thwarted by the fact that Irda would not be the sole authority to give the approval for mergers.
Moreover, insurers also point out that sending a notice to every policyholder informing them about the merger does not seem economically viable for the players. Insurers feel that this will lead to an unnecessary increase in operating expenses, at a time when most players are incurring losses in business. “We will be happy to inform our policyholders after the merger has taken place. Till the time the final transaction is complete, it does not make sense informing the policyholders,” said a senior official of a general insurance company.
Insurers are happy that Irda has mentioned in its guidelines that it would appoint an independent actuary to carry out the evaluation of the insurance business of the transacting parties. However, the absence of any guideline for evaluation of the companies has disappointed the players. Also, the players feel that certain norms need further clarity.
The guidelines are in favor of the policyholder as they would enjoy the same terms and conditions as they did under the existing policy. Moreover, they would be provided with an exit option.