Irdai Issues Show Cause Notice To Star Health Over Regulatory Violations; What It Means For Policyholders

The Insurance Regulatory and Development Authority of India (Irdai) has issued a show cause notice to Star Health and Allied Insurance Company, citing concerns over potential breaches of multiple Irdai regulations and guidelines. This action follows an inspection carried out by Irdai between January 31, 2022, and February 11, 2022, which identified issues related to the company’s business operations and practices.

In response, Star Health has confirmed that it is in the process of addressing the observations raised by the regulator. The company has been given a 21-day period from the date of receiving the notice to submit its reply along with any necessary supporting documentation. While Star Health maintains that it will adequately address the alleged violations and does not expect any major impact, it has stated that the final outcome and possible implications remain uncertain at this time.

What It Means For You 

When your health insurer is under investigation for violations of the Irdai's Health Insurance Regulations, 2016, TPA – Health Service Regulations, 2016, and Protection of Policyholders’ Interest Regulations, 2017, it's natural to feel concerned about your coverage. However, such regulatory scrutiny doesn't immediately compromise your existing policy. “Your coverage remains intact, and claims should be processed as usual. It's prudent to stay informed about the investigation's progress and any potential implications. If you experience significant delays in claims processing or receive unsatisfactory responses, consider filing a complaint through the Irdai's Grievance Redressal Mechanism,” says Sundaram Varadan, secretary, the Insurance Brokers Association of India (IBAI). 

Contemplate Porting Your Policy 

Contemplating porting your policy to another insurer is a significant decision. Portability is permitted at the time of policy renewal, and you must apply at least 45 days before your current policy expires. Before making this move, assess the new insurer's claim settlement ratio, which indicates the percentage of claims settled against those received; a higher ratio suggests better reliability. 

Examine the claims paid ratio to understand the proportion of claims paid out relative to premiums collected. “Additionally, consider the solvency ratio, reflecting the insurer's financial health and ability to meet long-term obligations; a ratio above the Irdai-mandated minimum is preferable. Ensure the new policy offers comparable or enhanced benefits without imposing additional waiting periods for pre-existing conditions. Porting should be a carefully considered decision, balancing immediate concerns with long-term coverage needs,” says Varadan.