IRDAI cracks down on health claim lapses, eyes action against 8 insurance firms: Report

India's Insurance Regulatory and Development Authority (IRDAI) has identified notable shortcomings in health claim practices following inspections at eight insurers. As per a report by CNBC TV18, eight general insurance companies, namely New India Assurance, ICICI Lombard General Insurance, HDFC ERGO General Insurance, Tata AIG General Insurance, Star Health and Allied Insurance, Niva Bupa Health Insurance, Care Health Insurance, and ManipalCigna Health Insurance, were being investigated for non-compliance related to claims settlement and adherence to the master circular.

The report highlighted that the violations identified by the regulator included inadequate adherence to the master circular, which may result in regulatory actions being taken.

The regulatory body discovered issues such as claim rejections, unwarranted deductions, and delayed settlements. These findings were part of a compliance review of the Health Master Circular, aimed at improving health insurance processes and protecting policyholders. The affected companies include both private and public sector insurers like Niva Bupa Health Insurance and New India Assurance, among others. These lapses highlight ongoing challenges insurers face in maintaining compliance and ensuring efficient service delivery.

The IRDAI's inspection reviewed adherence to the Health Master Circular, a directive to streamline health insurance processes. Insurers were scrutinised for improper implementation, particularly in rejecting valid claims and deducting inadmissible costs. Such violations could have significant implications for the insurers involved, potentially affecting their compliance records and service standards. The regulatory oversight aims to ensure insurers adhere strictly to the guidelines set forth in the circular, safeguarding consumer interests.

Responding to the identified lapses, a source said: "The lapses identified could lead to enforcement actions," which may involve requiring insurers to refund amounts to affected policyholders with applicable interest or facing financial penalties. This suggests a stringent approach by IRDAI to ensure adherence to regulatory standards and protect consumer rights. The prospect of financial penalties underscores the seriousness of the violations and the regulator's commitment to enforcing compliance.

The review represents one of the most extensive examinations in the health insurance sector this year. It comes at a time when there is an increasing number of consumer complaints related to claim processing, highlighting the need for insurers to improve their service. 

Following reports of regulatory inspections, New India Assurance clarified that the recent reviews by Irdai aim to strengthen operational standards and compliance across the insurance sector, rather than being adversarial. The insurer emphasized its complete adoption of the Master Circular issued by Irdai, both in principle and execution.

During inspections, Irdai flagged a few procedural issues, such as an excessively detailed Customer Information Sheet, which has since been simplified. It also advised including a product management panel member on the Claims Review Committee, now implemented, and ensuring timely portability data submissions to the Insurance Information Bureau, for which systems are in place. The company affirmed that all corrective actions have been completed and communicated to the regulator, reaffirming its commitment to customer service and efficient claims handling.

Similarly, ICICI Lombard noted that Irdai’s inspections, focused on sector-wide challenges in implementing new health-related guidelines and confirmed its robust compliance and governance standards.