IRDAI Flags Lapses in Health Insurance Claims: 8 Insurers Under Scrutiny

The IRDAI has flagged irregularities in health insurance claims across eight major insurers, issuing show-cause notices for non-compliance. Learn how this impacts policyholders and what steps insurers are taking to improve.

In a significant move aimed at safeguarding policyholders and tightening compliance within India’s health insurance sector, the Insurance Regulatory and Development Authority of India (IRDAI) has initiated show-cause notices to eight health insurance providers. This development follows inspections that revealed procedural lapses and possible regulatory violations in the claims settlement processes of these companies.

Who’s Under the Scanner?

According to a CNBC TV18 report citing regulatory sources, the eight insurers facing scrutiny are:

Niva Bupa Health Insurance
Star Health and Allied Insurance
Care Health Insurance
ManipalCigna Health Insurance
New India Assurance
Tata AIG General Insurance
ICICI Lombard General Insurance
HDFC Ergo General Insurance

These are not fringe players but industry giants, representing a large chunk of India’s health insurance market. Their inclusion in the list underscores the seriousness of the IRDAI’s findings.

What Triggered the IRDAI Action?

The IRDAI initiated detailed inspections of these insurers' health insurance portfolios, focusing on compliance with the new Health Insurance Master Circular, which introduced enhanced norms for transparency, claims management, and customer servicing.

Some of the key issues identified during inspections include:

Overly detailed and complicated Customer Information Sheets
Claims Review Committees are missing representation from Product Management Committees
Delays in submitting portability data
Deviation from standard claim settlement protocols

These lapses, though seemingly procedural, can have serious implications for policyholders, especially when they are already dealing with a health crisis.

Insurer Responses: Playing Down or Playing Safe?

The initial responses from some of the insurers attempt to reassure stakeholders.

ICICI Lombard, in its statement, maintained that it adheres to high standards of compliance and corporate governance. The company emphasized that the inspections were part of a regular audit process and not necessarily a punitive action.
New India Assurance echoed a similar tone, clarifying that IRDAI inspections are part of regulatory oversight. They described the inspection as "not adversarial," claiming full implementation of the Master Circular.

These responses aim to instill confidence among investors and customers, but also subtly acknowledge that there’s room for improvement.

Why This Matters for Policyholders

While this news may seem like an industry-level compliance issue, its ripple effects can directly impact customers in the following ways:

1. Delayed Claims Processing

If there are procedural inefficiencies, especially around claims review, it can result in delays during a time when patients or families are in critical need of funds.

2. Reduced Transparency

Complicated and overly detailed customer information sheets can be confusing, leaving many unaware of exclusions, claim procedures, or limitations.

3. Portability Problems

Delays in portability data submissions can affect customers trying to switch insurers without losing benefits like waiting period credits.

4. Potential Rejection of Genuine Claims

If internal claims committees lack adequate oversight or are poorly constituted, the chances of unjustified claim rejections or delays increase.

5. Loss of Trust in Private Healthcare Financing

Perhaps most importantly, such reports dent public trust in health insurance as a reliable healthcare financing option, especially in a country where out-of-pocket health expenses remain high.

What IRDAI’s Action Signals Going Forward

IRDAI’s move to issue show-cause notices is not just punitive but a preventive measure to ensure future adherence to the newly laid out guidelines. The Health Insurance Master Circular was designed to improve:

Customer awareness
Standardization of practices
Timely settlements
Transparency across insurers

The regulator’s proactive approach sends a clear message—non-compliance will not be tolerated, even from the largest players.

The Road Ahead: Will It Improve Health Insurance in India?

There is a silver lining here. The scrutiny, while exposing flaws, could trigger long-overdue reforms. Insurers may now:

Simplify documentation
Digitize and automate claim submission and tracking
Improve grievance redressal systems
Increase policyholder education on rights and procedures
Strengthen the role of internal review committees with diverse and qualified members

This incident could act as a much-needed catalyst for insurers to prioritize policyholder-first practices.

Advice for Policyholders: Stay Alert and Informed

As a policyholder, here’s what you can do to safeguard your interests:

✅ Understand your policy terms thoroughly, especially clauses related to claims, pre-existing conditions, sub-limits, and waiting periods.

✅ Ask your insurer for a simplified Customer Information Sheet, which is your right under the new circular.

✅ Track the claim process and timelines, and don’t hesitate to escalate through IRDAI’s grievance cell if you face unjustified delays or rejections.

✅ Don’t ignore the portability option—switch insurers if you’re unhappy with the service or claims handling.

✅ Document everything during hospitalization and treatment—this helps if you need to appeal a claim decision.

Final Thoughts: A Wake-Up Call for the Industry

Health insurance is not just another financial product—it is often the safety net between life and death, especially for middle-class families in India. The IRDAI’s crackdown on eight major insurers reminds the entire ecosystem—insurers, regulators, and consumers—about the need for accountability, transparency, and empathy in the health claims process.

This development should be viewed not merely as a regulatory action but as an opportunity to restore trust in India’s healthcare financing framework.

Author’s Note:

As someone who has followed India’s insurance sector for years, I see this as a pivotal moment. Regulatory interventions are crucial, but long-term trust will only come from a cultural shift within insurers—one that puts the insured at the heart of every policy and claim. I urge both industry stakeholders and customers to view this episode as a moment for reform, not just reprimand.

Let’s hope this sparks a new era where insurance truly serves its purpose—protecting people when they need it the most.

The Financial And Tech Literacy