What Bharti AXA General's merger with ICICI Lombard means for you3 min read . Updated: 25 Aug 2020, 02:14 PM IST
- Bharti AXA General's policyholders will get the same or a similar plan at the time of renewal
- Since ICICI Lombard customers will continue dealing with the same entity, they will not see any changes
ICICI Lombard General Insurance Co. Ltd and Bharti AXA General Insurance Co. Ltd, last week, announced a merger to form the country’s third-largest general insurance entity. The merger is subject to approval from the Insurance Regulatory and Development Authority of India (Irdai), Competition Commission of India, stock exchanges, Securities and Exchange Board of India (Sebi) and other shareholders and stakeholders.
“The merger of Bharti AXA General Insurance with ICICI Lombard General Insurance is an outgrowth of efforts for bringing greater business synergies and enhancing value-creation for all stakeholders. Synergies in technology, distribution through own channels and partners and servicing touch points would be the new hallmarks for Bharti AXA policyholders, who are expected to gain from the comprehensive product suite, enhanced services and strengthened bandwidth," said Sanjeev Srinivasan, managing director and chief executive officer, Bharti Axa General Insurance. The company which was founded in 2008 is a joint venture between Bharti Enterprises (51%) and Axa (49%). With this deal, Bharti Axa General will demerge from Bharti Enterprises and merge with ICICI Lombard’s business.
This is not the first time an insurance company has merged with another. While the transition process—like in case of previous mergers and acquisitions—could take up to a year, we tell you what this move means for Bharti Axa’s policyholders and what they should look out for.
Since ICICI Lombard customers will continue dealing with the same entity, they will not see any changes in their policies due to the merger.
Impact on products
The insurer offers various products under the motor, health and travel categories. However, no immediate impact is expected on products. Srinivasan said there are many legs to the approval process for the merger and the company will reach out to the policyholders at the right time.
“Meanwhile, customers will be serviced as usual for their new policies, renewals and claims, digitally and physically, without any disruptions. After the merger is completed, all policies of Bharti AXA General Insurance will be migrated into the demerged entity, which will be proactively communicated to the customers," he said.
Once the two companies are merged, ICICI Lombard may look at eliminating products that it already has in its portfolio to avoid duplication. Experts said that merged entities normally retain the acquired company’s products for a while, but gradually look at eliminating wherever there is an overlap.
“Policyholders can be sure of two things. On the renewal of policies, they will get the same or similar plan. Also, they’ll have the option to exit the current plan and enroll with the merged company’s plan with the same continuity benefits," said Indraneel Chatterjee, principal officer and co-founder, RenewBuy, an online insurance aggregator.
In case any plan is discontinued, the company will get in touch with the policyholders through various channels.
Impact on premiums
Since the transition could take up to a year, a change in premiums is not something policyholders need to worry about immediately. However, the merger of the two companies and subsequent rationalization of products may lead to an impact on the premiums after a certain period.
Rakesh Goyal, director, Probus Insurance, an insurtech broking company, said all the other benefits such as no-claim bonus (NCB) in health policies and so on will be transferred.
“At times Barti Axa could be cheaper than us or the other way round but this is based on each company’s data, claims experience, and the strategies adopted for scaling up. We will aggregate the data whenever allowed to and then see what is favourable for our customers as well as shareholders," said Bhargav Dasgupta, managing director and chief executive officer, ICICI Lombard General Insurance.
Impact on claims
Servicing of claims will not change until the merger is over as both companies will continue to operate as separate entities. Further, Dasgupta said the claim period is the moment of truth and the company prefers having internal teams in order to service claims.
For both motor (small-ticket claims) and health claims, ICICI Lombard has internal teams for administration. “We find that internal service works much better because there are dedicated teams for everything. Post the merger, we will want to follow the same processes. We will bring in most of the claims servicing under a common structure," he said.
The merger could also result in a wider chain of network providers, benefitting the policyholders of both the insurers. Since Irdai keeps a close watch on the companies, experts said there isn’t much for policyholders to worry about. Goyal said in the past when insurance companies have merged, it has led to better servicing and comprehensive product suite.