Change in ownership of an insurance company: What it means for the policyholder
Religare Enterprises Ltd, on April 9 announced the sale of its 80% stake in Religare Health Insurance Co Ltd (a standalone health insurance company), to a group of investors led by True North, a private equity firm. Religare will get ₹1,040 crore for the deal and the health insurance company is valued at ₹1,300 crore.
Religare Health Insurance is owned by Religare Enterprises (80%), Corporation bank (5%), Union Bank of
India (5%) and the remaining 10% is Religare staff through employee stock options.
As Religare Enterprises prepares to exit its health insurance business and the insurer prepares for a change in shareholding, what does it mean for policyholders?
According to Anuj Gulati, MD and CEO, Religare Health Insurance, it means business as usual for the customers. “Nothing changes for customers. They will have the same set of products, premiums rates and phone numbers to call on. Our network of hospitals and claims procedures remains the same. So there will be complete continuity.”
“In fact, the new shareholders will back the current management and corporate governance policies, so even that doesn’t change. As for the name of the company, as per the shareholder arrangement, we can retain the brand name for a long period of time, so customers will continue to interact with the same name.”
“Insurance is a regulated entity, so the new shareholders will be scrutinised well to ensure that consumers are protected. Also, given that the products, pricing, network of hospitals, claims servicing won’t change,” said Shashwat Sharma, partner and head of insurance at KPMG India. In the retail space, the insurer has eight products on offer. In the pure health insurance space, ‘Care’ is its flagship product, which offers a sum insured of up to ₹6 crore. ‘Care Freedom’ is designed for senior citizens and individuals with pre-existing ailments. ‘Joy’ focusses on maternity benefits whereas ‘Enhance’ is a super top-up plan that allows you to buy additional health insurance at cheaper costs.
Among the defined benefit health plans, the company has a personal accident insurance policy and a critical illness plan, which bundles a personal accident policy as well.
A defined benefit plan pays lump sum to the policyholder in case of an insured event takes place. The insurer also has two travel insurance plans, one for leisure and business travellers and the other specifically for students going abroad to study.
The product suite will continue as it is. However, because of the deal, a major thrust on fintech can be expected going forward, Gulati said. “The new set of shareholders have been tracking the sector and interacting with us for quite some time. They share our vision, and have a deep focus on fintech. In fact that’s what they hope to bring to the table. One can expect rapid adoption of technology in the future.”
Even in terms of pricing, the customers of Religare Health Insurance should have nothing to worry about.
“During a takeover or a merger, the regulator is hesitant to allow for any sudden rate hikes, so as to protect policyholders. So in this sense, customers will not have to face surprises,” said Kapil Mehta, co-founder, SecureNow Insurance Broking Pvt Ltd.