When two insurers sign a merger deal, the new insurer (that takes over) secures existing customers from all transitions. “The health insurance policy sold by the insurance company remains intact from all aspects including features, premium prices and terms and conditions when there are mergers and acquisitions by another insurance company. The Insurance Regulatory and Development Authority of India (IRDAI) regulatory also plays a vital role in ensuring that the existing customers and the existing policy are not affected by the transition," said Naval Goel, Founder and CEO, PolicyX.com.
Let’s assume that the insurance company (that takes over) changes the existing health policy in terms of terms & conditions or premium prices or even plans to withdraw it for any reason. Even in this case, the changes are only made for the new customers wherein the existing customers continue to get the same policy benefits they take before the merger and acquisition. The amalgamation of HDFC Life and Exide Life insurance is the latest to make the headlines. Before this, the general insurance companies were aggressively taking this route. For instance, Paytm acquired Raheja QBE, HDFC Ergo acquired Apollo Munich, Sachin Bansal bought DHFL General Insurance, and ICICI Lombard acquired Bharti Axa General. Goel added, “The customers remain secure from any adverse effects of mergers and acquisitions. There are about 25 life insurance companies and 29-30 general insurance companies where very few players have gone for mergers. Currently, there is no monopoly scenario where the insurance companies can rule the customers."
Understanding the positive impact of mergers and acquisitions, Sanjiv Bajaj, Jt. Chairman and MD, Bajaj Capital said that policyholders typically benefit from these deals. “When a merger or acquisition occurs, larger insurance companies take over smaller companies with lesser capabilities and skills and improve their service and delivery. This process eventually means that the industry will have bigger insurance companies with digitally advanced capabilities, better products and a stronger ability to offer complete services to policyholders, including hassle-free claim settlement process," he said.
Mergers and acquisitions also do not significantly change the policy selection process. “The basics of selecting the right insurer would remain the same where the customers will need to evaluate the product suite offered by different companies, their existing customers’ service, affordability and features offered by each insurance company. However, the challenge might be that there will be only better choices to select from with improved scenarios of the insurance industry," said Naval.
