Page 9 - Insurance Times August 2020

IRDAI News

IRDAI allows insurers to changes to the value creation options the IRDAI said the provisions related
and factor in some alternate mecha- to sale and purchase of equity will also
get customers' nod by nisms subject to regulatory approvals apply on creation of pledge or any
electronic means and as maybe permitted under appli- other kind of encumbrance over shares
IRDAI has allowed life insurers to ob- cable law." Axis Bank also made a simi- of an insurance company by its promot-
tain customers consent by electronic lar statement to the exchanges. ers.
means, in place of physical signatures According to sources, there's a clause It further said 'fit and proper' norms
in pure risk products till December in the deal that says that after a little should be followed for sale and pur-
31,2020. This has been done taking over five years, the entity will go for a chase of equity above 1 percent and
into account the difficulty in obtaining listing on the bourses. However, if the upto 5 percent of the paid-up
physical signatures of customers due to listing does not happen, Axis Bank capital. The application for transfer of
the pandemic. would swap the unlisted Max Life's 30 shares, it added, should be filed
per cent holding with the listed entity through the insurance company con-
IRDAI directs Max Life to Max Financial Services, depending on cerned.
the swap ratio. Further, if even that is
rejig Axis Bank deal not possible, then Axis Bank would IRDAI: Insurers should de-
IRDAI has sent communication to Axis have a put option to sell its shares in
Bank and Max Financial Services, which Max Life at a pre-determined price to cide to take action against
entered into an agreement in April Max Financial. IRDAI has raised objec- hospitals denying cashless
whereby the lender would have in- tions to these options included in the
creased its stake in life insurance com- deal, said a source, adding there would service
pany Max Life promoted by Max Finan- tweaks to this part. An insurance company can take action
cial Services, to make some changes to against a hospital for demanding ad-
the value creation options that the IRDAI lays out norms for vance from a policy holder who is sup-
two firms were exploring. IRDAI has share transfer of insurance posed to get cashless service, an offi-
asked them to factor in some alternate cial of insurance regulator IRDA said.
mechanisms subject to regulatory ap- companies In a recent circular, Insurance Regula-
provals. According to IRDAI sale, purchase and tory and Development Authority (IRDA)
In an exchange filing, Max Financial pledge of equity in excess of 5 per cent has put the onus of taking steps
said, "Earlier, Axis Bank and Max Fi- of an insurance company's paid-up against medical establishments for
nancial had agreed to certain value capital will need the regulator's prior deficiency in service on the insurer, the
creation options and related rights. approval, and any violation of the official said.
Based on correspondence from IRDAI guidelines will attract action. There has been a sharp spike in com-
received by the firm, Axis Bank and the Issuing a clarification on the 'transfer plaints post COVID-19 outbreak that
company have agreed to make some of share of the insurance companies', private hospitals are demanding huge
The Insurance Times, August 2020 9