Soon, many Public Sector Banks (PSBs) will be merged and the group health insurance policyholders are tensed about their policies. The Insurance Regulatory and Development Authority of India, also called IRDAI has issued certain guidelines on these group health insurance policies which will be implemented once the banks are merged together.
According to the guidelines, until the end of the policy period, the policy will be serviced by the insurance company that initially raised it even after the merger.
Several PSBs have already been merged which has lead to consolidation in the Indian banking sector, and many will be merged in the coming future.
List of mergers are as follows:
- Indian Bank will merge with Allahabad Bank
- Vijaya Bank and Dena Bank will merge with Bank of Baroda
- Syndicate Bank will merge with Canara Bank
- Andhra Bank and Corporation Bank will merge with Union Bank of India
- United Bank of India and Oriental Bank of Commerce will merge with Punjab National Bank
As a result of the mergers of the Public Sector Banks, IRDAI has issued guidelines to protect the interest of the policyholders of group insurance. These guidelines will be absolute and will have mandatory to be followed by the banks and insurance companies.
Let us take a look at the guidelines issued by the IRDAI:
- After the PSBs mergers, the original insurance company will be the sole care taker of the insurance policy until the policy ends. The insurer will come up with agreement with the bank acquiring it for the same.
- The bank acquiring the other bank can, at the same time, continue to have insurance coverage for its own existing customer via its present insurance company. Additionlly, with the consent of the original insurer, the acquiring bank can offer insurance to the customer of the merged bank.
- The provisions of Regulation 3 of IRDAI (Registration of Corporate Agents) Regulations, 2015 dictates that the agreements of the banks merged together can be continued with respective insurance companies for 12 months from that date of the merger only if the acquiring bank is willing to function as the Corporate Agent for the respective insurance companies.
- A bank in all its capacity as the group organiser can have group insurance agreements with as many insurance companies for insurance needs for its user.
- Once the current policy of the group insurance policy of the banks which have merged together is matured, the acquiring bank has the option to continue with the same insurance company with the same group insurance policy for the customers of the merged bank(s).
With these guidelines, IRDAI is trying to minimise the problems that can be faced by the account holders of the PSBs that will be undergoing the mergers for the servicing of health insurance coverage.