The Insurance Regulatory and Development Authority of India (IRDAI) has discovered significant lapses in the claim settlement practices of Star Health and Allied Insurance, a stand-alone health insurer. The regulator is likely to take action against the company, although official investigations are still ongoing. IRDAI has also scrutinized 8-10 other general and health insurers, but no action has been reported against them. The regulator examined various claim-related aspects, including the number of claims repudiated and accepted, deductions, and queries raised by policyholders.
According to IRDAI’s handbook of insurance statistics, Star Health’s incurred claim ratio for the year 2023-2024 was 66.47%, which means that for every Rs 100 collected as premiums, the company paid approximately Rs 67 towards honoring policyholder claims. This is marginally higher than the total incurred claim ratio of stand-alone health insurers, but significantly lower than the cumulative incurred claim ratio for all health and general insurers.
Star Health also recorded the lowest claim settlement ratio within 3 months among all stand-alone health insurers, at 82.31% for the year 2023-24. The company repudiated or rejected 2,96,356 claims between 2023-24, which is significantly more than other insurers in the same category. Additionally, Star Health received the maximum number of complaints during the year, at 16,804, which is the highest amongst all general and health insurers in the country.
In response to the allegations, Star Health stated that they have not received any communication from IRDAI on this matter and that they are committed to a customer-centric approach. The company claimed that IRDAI’s audits and inspections are a routine process to ensure compliance across the industry and that the media statement appeared to be speculative and motivated in nature.
The findings of IRDAI’s investigation have raised concerns about Star Health’s claim settlement practices and its commitment to policyholders. The company’s low incurred claim ratio and high number of claim rejections and complaints suggest that it may not be honoring its policyholders’ claims in a fair and timely manner. As a result, IRDAI’s potential action against Star Health could have significant implications for the company and its policyholders.