The Insurance Regulatory and Development Authority of India (IRDAI) has identified several irregularities in the claim settlement practices of Star Health and Allied Insurance, a private health insurer. According to a CNBC-TV18 report, the regulator has launched an investigation into the matter and is expected to take appropriate action against the insurer. IRDAI has reviewed the claim-handling processes of 8-10 other general and health insurance providers, but no enforcement measures have been reported against them.
Star Health, in response to the allegations, has denied receiving any formal communication from IRDAI and has clarified that regulatory audits and inspections are routine processes aimed at maintaining transparency and accountability in the insurance sector. The company has also dismissed the media reports as speculative and misleading.
IRDAI’s data shows that Star Health’s claim settlement performance has raised concerns. The insurer’s incurred claim ratio, which measures the percentage of premium revenue paid out as claims, stood at 66.47% in 2023-24, slightly above the average for stand-alone health insurers but significantly lower than the industry-wide average. Star Health also recorded the lowest claim settlement ratio within three months among stand-alone health insurers, with a significant backlog of claims taking over two years to settle.
Furthermore, Star Health rejected 2,96,356 claims in FY 2023-24, the highest in the sector, and topped the list in policyholder grievances with 16,804 complaints filed. The regulator’s next steps against Star Health are highly anticipated, and it remains to be seen what actions will be taken against the insurer. This incident highlights the importance of regulators monitoring the claim settlement practices of insurance providers to ensure compliance with industry best practices and protect policyholders’ interests.