Continuity amidst change

In a previous instalment of Cover Note we saw how group policies can be at discontinuance risk and how you can ensure your coverage is continuous.

The group policies in question were those offered by commercial organisations such as banks for their savings bank account/ credit card customers, or by institutions such as social clubs for their members.

Let us now look at another ‘threat’ to the continuity of your coverage; change of ownership, or mergers / acquisitions of insurers.

After the liberalisation process in the insurance sector in India started around the turn of the century, we have seen companies changing hands and being merged.

The bottom line here is that you, as a customer, have protection written into the regulation. If your insurance company has a new owner tomorrow, or is merged into another entity, it will be after due diligence and process set out under the law.

Honouring contract

This ensures that the legal contract between you and your insurer will be honoured till its end. This is the current policy period/year or the payment of the last benefits/ claims (like disability benefits for instance) under general insurance policies. Under life policies, the policy period will stretch into the future until maturity of the policy or the death of the insured person. Just a word of caution: group life policies are annual in nature. In case of annuity, it will be till the payment of the last annuity / return of purchase price as per the terms of the contract. All this points to a long-term view by the acquirer.

The new company that owns your insurer has to honour all the obligations under the contract and you can establish your rights with them.

Your responsibility is to continue to maintain your policies as valid by being on time with your premiums and so on.

When it comes to renewal, policyholders have the right to lifelong renewal of health insurance and this is binding on your new insurer too. Premium rate increases and underwriting decisions on additional or enhanced coverage rests with the new insurer.

What can you do in an environment when merger news of large insurance companies is in the air?

Keep in touch with your intermediary.

Build and strengthen your relationship with the contact person, his boss the development officer/ agency manager / team leader as they may be designated. Visit the branch manager or equivalent and make an acquaintance. Find out the reporting office of that branch, get familiar with their communication / grievance process.

Change of address, queries about renewal or any change in premium rate and so on should be put in writing and you should keep on file both your queries and responses, be they in hard copy or digital.

Many a time, the problem we face is that the agent has retired or is otherwise unresponsive. If, as described above, we maintain a relationship, we will learn about these developments really early and can continue the business relationship without missing a beat.

But the way it works in everyday life is that we realise only when we don’t get a renewal reminder or phone call and renewal is due. Or, worse still, overdue. The worst, of course, is when we try to call about a claim and come face to face with nothingness! Trust me it has happened to me too.

(The writer is a business journalist specialising in insurance & corporate history)

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