Irdai Imposes Rs 1 Crore Penalty On Care Health Insurance For Claim Settlement Lapses

Care Health Insurance has been fined Rs 1 crore by the insurance regulator after an inspection flagged issues with the company's settlement of health insurance claims, according to a recent report by The Economic Times. The action comes after the regulator reviewed the insurer’s internal processes and found gaps that, in its view, affected policyholders directly.

The Insurance Regulatory and Development Authority of India (Irdai) carried out a remote inspection of the company’s operations. The review looked at several functions, including grievance handling and internal controls, but the regulator’s order makes it clear that claim settlement failures were the central issue. These were treated as systemic problems rather than stray errors.

What The Inspection Found

The inspection showed that customers were not always told clearly how their claims were assessed. In some cases, deductions were applied without proper explanation. In others, claims were approved only in part, but the settlement letters did not clearly spell out why the full amount was not paid.

Documentation was another area of concern. The regulator found discharge summaries that were incomplete or missing required signatures. Some claim files did not show a clear trail of checks before approval. According to the regulator, this pointed to weak internal discipline rather than paperwork slipping through occasionally.

Cashless claims also came under the scanner. The review found that coordination between hospitals, service providers, and the insurer often fell apart. As a result, some customers were left guessing about the status of their claims. In several cases, they were also not told that unresolved disputes could be taken to the insurance ombudsman.

Other Shortcomings Flagged

The penalty was imposed for problems in claim settlement, but the inspection did not stop there. The review also pointed to loose ends in grievance handling, inconsistencies in reinsurance entries, and issues around how certain premium balances were being parked. It also pointed to weak supervision at the back end and shortcomings in how systems and data were handled. For now, these findings did not result in additional fines.

Instead, it issued warnings and directions, asking the insurer to tighten controls and improve monitoring at the senior management level. The message was that follow-through would matter.

Care Health Insurance has been asked to pay the Rs 1 crore penalty from shareholders’ funds within the prescribed timeline. The order must also be placed before the company’s board. The insurer is required to submit a report explaining what steps it has taken to fix the shortcomings highlighted during the inspection.

Why This Matters

For customers, the order underlines how closely claims are being watched, often the point at which health insurance causes the most anxiety. The fine does not translate into direct payouts, but it does show that insurers can be pulled up for unclear practices.

For the industry, the action is a reminder that claim settlement is not just an operational function. With more people covered and more claims being submitted, insurers can expect tougher scrutiny of how decisions are made and explained. The regulator’s intervention makes it clear that lapses in this area will not be ignored.