The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a monetary penalty of ₹1 crore on Care Health Insurance after identifying significant shortcomings in its claims settlement practices and policyholder communication, according to media reports.
Findings from Regulatory Inspection
The penalty stems from a remote inspection conducted by the regulator, with the order dated December 15, 2025. The review uncovered multiple governance-related deficiencies in the insurer’s operational processes.
Deficiencies in Claims Settlement Practices
IRDAI noted that several claim files lacked mandatory documentation, including patient or attendant signatures on discharge summaries and hospital bills. In certain instances, claim amounts were reduced on account of hospital discounts or tariff variations, without clear explanations being provided to policyholders. The insurer also did not share final hospital bills with insured members and failed to issue detailed settlement statements outlining the reasons for deductions. Communication related to claim settlements was largely directed to hospitals, with limited disclosure to policyholders. The inspection further revealed that only 31% of claims were supported by complete hospital documentation.
Additional Governance Concerns Flagged by IRDAI
Apart from the financial penalty linked to claims transparency issues, IRDAI issued warnings covering other compliance areas, including grievance handling mechanisms, cybersecurity controls, reinsurance accounting practices, and the treatment of unidentified premium balances. Grievance closure communications did not adequately reference the Insurance Ombudsman, relying instead on generic links and basic contact details. Previously identified cybersecurity gaps remained unresolved within stipulated timelines. The regulator also observed that reinsurance accounting practices presented an inflated view of the company’s financial position.
Issues in Managing Proposal Deposits
The regulator highlighted that proposal deposits amounting to ₹1.06 crore were retained in unallocated premium accounts for periods exceeding six months. These amounts were not transferred to unclaimed balances, which was found to be inconsistent with prescribed policyholder protection requirements.
Care Health Insurance stated that its communications included relevant online references for ombudsman information and acknowledged documentation gaps, adding that corrective measures were being undertaken to address system limitations and improve coordination with hospitals.
Summary:
IRDAI has levied a ₹1 crore penalty on Care Health Insurance following a regulatory inspection that revealed lapses in claims settlement transparency and communication. The regulator also flagged additional governance issues related to grievance redressal, cybersecurity, reinsurance accounting, and the handling of proposal deposits.
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