Insurance Regulatory and Development Authority (Irda) today released a framework for amalgamation of non-life insurance companies to ensure smooth functioning of the sector.
The framework offers guidelines pertaining to protection of policy holders, rationalisation of the branch network, streamlining of products, taxation and valuation issues and projected revenue of the merged entity.
The policy holders of the transferor entity will continue to enjoy the same terms and conditions under the existing policy and will be given an exit option. “The transacting parties shall ensure that policyholders of the transferor entity are migrated in a manner which ensures that their existing policies are continued to be serviced by the transferee entity on terms and conditions no less favourable than those existing prior to the merger,” said Irda.
In December, Irda Chairman Hari Narayan had said they were actively considering the merger proposal between Reliance General Insurance and Royal Sundaram General Insurance Company. He had said the regulator will issue guidelines on amalgamation of non-life insurance companies.
According to the guidelines, the transacting entities will have to take prior permission from the authority for rationalising the existing branch network of the transferee entity.
