According to recent media reports, the Insurance Regulatory Development Authority of India (Irdai) has found a major blunder in the claim settlement practices of Star Health and Allied Insurance, a stand-alone health insurer. While the process of official investigations is still ongoing, the Irdai is likely to take action against the insurer. Along with Star Health, the regulator has also done due diligence on other general and health insurers in the country. However, it is reported that no action has yet been taken against them.
As per the report, Irdai has scrutinised different claim-related issues, such as the number of claims repudiated and accepted, deductions, queries raised by the policyholders, etc.
The official statement by Star Health says that they have so far not received any communication from Irdai on this matter.
According to the official statement: “We wish to reassure all our stakeholders that at Star Health Insurance, we are committed to a customer-centric approach, ensuring that our processes and practices align with the best interests of our policyholders. Irdai conducts regular audits and thematic inspections as part of its regulatory oversight in line with the framework outlined in its master circulars. These assessments are a routine process to ensure compliance across the industry. The media statement appeared to be speculative and motivated in nature, and we have not received any communication on this subject from the regulator.”
A Not-So-Positive Claim Settlement Record Of The Insurer
According to the Irdai’s handbook of insurance statistics, Star Health’s incurred claim ratio, that is the percentage of premiums an insurer collects that they spend on settling claims during a specific financial year, stood at 66.47 per cent.
This essentially means that for every Rs 100 that Star Health collected as premiums, it only pays around Rs 67 for honouring policyholder claims between 2023-2023.
This is only slightly higher than the total incurred claim ratio of stand-alone health insurers, which stood at 63.63 per cent during 2023-24, and it is significantly lower than the 82.52 per cent, which was the cumulative incurred claim ratio for all health and general insurers active in the country during 2023-24.
Surge In Complaints And High On Claim Rejections
For the year 2023-24, Star Health and Allied Insurance Co. Ltd. also recorded the lowest claim settlement ratio within three months amongst all standalone health insurers, at 82.31 per cent. Within barely three to six months, in 2023-24, the company settled 2.74 per cent of its claims. Within a period of six months and one year, around 0.35 per cent of claims were done away with. For a period of over one year but less than two years, Star Health had a claim settlement ratio of 0.074 per cent. The company took about two years to settle 0.03 per cent of its claims.
