The Insurance Regulatory and Development Authority of India (IRDAI) has discovered lapses in the claim settlement practices of stand-alone health insurer, Star Health and Allied Insurance. This is based on an ongoing official investigation, which is expected to result in action against the insurer. The regulator has reviewed the operations of 8-10 other general and health insurers, but no action has been taken against them as of now.
According to IRDAI’s handbook of insurance statistics, Star Health’s incurred claim ratio for the financial year 2023-24 was 66.47%, which is slightly higher than the average incurred claim ratio of stand-alone health insurers. However, it is lower than the combined general and health insurers. Star Health also recorded the lowest claim settlement ratio within three months among all stand-alone health insurers, with a settlement rate of 82.31%. It took the company between three to six months to process 2.74% of claims, while 0.35% of claims were settled between six months and one year.
Notably, Star Health rejected the highest number of claims in 2023-24, with 2,96,356 rejections, which is significantly more than other stand-alone health insurers. The company also received the highest number of customer complaints, with 797 pending complaints at the beginning of the financial year and 16,804 reported during the year, of which 16,603 were formal grievances. This is the highest number of complaints among all general and health insurers, except for the public sector insurer, National Insurance Co. Ltd.
This investigation highlights the importance of claim settlement practices in the insurance industry, and the need for regulators to ensure that insurers follow fair and transparent procedures in handling customer complaints. The action taken by IRDAI against Star Health and Allied Insurance is expected to set a precedent for the industry, promoting a culture of accountability and transparency.