Published in Mint, on 13th April 2017
Religare Enterprises Ltd, on 9 April announced the sale of its 80% stake in Religare Health Insurance Co. Ltd (a standalone health insurance company), to a consortium of investors led by True North, a private equity firm. Religare will get about Rs1,040 crore for the deal and the health insurance company is valued at Rs1,300 crore.
Religare Health Insurance is owned by Religare Enterprises (80%), Corporation bank (5%), Union Bank of India (5%) and the remaining 10% is by the employees of Religare 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 this mean for the policyholders?
As per Anuj Gulati, managing director and chief executive officer, Religare Health Insurance, it means business as usual for the customers. “Nothing changes for our customers. They will have the same set of products, premiums rates and phone numbers to call on. Our network of hospitals and claims procedures also remains the same. So there will be complete continuity,”he said.
“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 reasonably long period of time, so customers will continue to interact with the same name,” he added.
“Insurance is a regulated entity, so the new shareholders will be scrutinized well to ensure that consumers, existing as well as the new one, are protected. Also, given that the products, pricing, network of hospitals, claims servicing won’t change; customers have nothing to worry about,” said Shashwat Sharma, partner and head of insurance at KPMG India.
The product suite
In retail space, the insurer has eight products on offer. In the pure health insurance space, ‘Care’ is its flagship product, which offers sum insured of up to Rs6 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 an insured event takes place. For instance, a critical illness plan will pay the sum assured or the insured amount to the policyholder in case she is diagnosed with any of the critical illnesses listed in the policy.
The insurer also has two travel insurance plans, one for leisure and business travellers and the other specifically for students going abroad to study.
What will change?
The product suit will continue as it is, however as per Gulati, because of the deal, a major thrust on fintech can be expected going forward.
“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,” added Gulati.
Even in terms of pricing there is nothing to worry about.
“Typically, 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 any surprises,” added Kapil Mehta, co-founder, SecureNow Insurance Broking Pvt. Ltd.
As per Gulati, pending regulatory approvals, the change in the shareholding structure should be complete over the next few months.