IRDAI Cracks Down on 8 Insurance Firms Over Health Policy Lapses — Know the Companies Under Scrutiny

India’s insurance watchdog, IRDAI (Insurance Regulatory and Development Authority of India), has taken regulatory action against eight major insurance companies after finding irregularities in their health insurance portfolios during recent inspections.

🛑 What Happened?

IRDAI is issuing show-cause notices to eight insurers following the discovery of serious procedural lapses in health insurance claim practices during an internal audit. This audit aimed to assess how effectively these companies were complying with industry standards and regulatory frameworks.

🏢 Companies Under Scrutiny

The following eight companies are facing IRDAI action:

Niva Bupa Health Insurance

Star Health and Allied Insurance

Care Health Insurance

ManipalCigna Health Insurance

The New India Assurance Company

TATA AIG General Insurance

ICICI Lombard General Insurance

HDFC ERGO General Insurance

Source: CNBC-TV18 (via insider reports)

🔍 Key Observations from IRDAI Inspection

The inspections, carried out in a phased manner, highlighted gaps in the insurers' processes. The issues pointed out include:

• Excessively complex and detailed customer information sheets,

• Lack of appropriate representation in Claims Review Committees by product management personnel,

• Delays or inconsistencies in submitting health policy portability data.

These were seen as procedural lapses that could impact policyholder transparency and service standards.

🧾 What IRDAI Says

The notices are intended to push these companies to explain and rectify their practices. While not yet punitive, the notices are a clear warning to ensure alignment with regulatory expectations.

🏢 Company Responses

🔹 New India Assurance
The public sector insurance company acknowledged IRDAI's right to conduct inspections and clarified that such reviews are routine and constructive, aimed at improving compliance. The company stated it has fully adopted IRDAI’s master circular guidelines.

🔹 ICICI Lombard
The private insurer emphasized its strict adherence to regulatory norms, stating that it maintains high standards of governance and compliance. It also confirmed that the company has already integrated changes as per last year’s master circular issued by IRDAI.

⚖️ What It Means for Policyholders

This development is significant for health insurance customers because:

• It underscores IRDAI’s commitment to consumer protection.

• It sends a message that non-compliance with customer service norms will not be tolerated, even by top players.

• Future audits may become more rigorous, possibly leading to policyholder-friendly reforms.

Conclusion

IRDAI’s regulatory intervention acts as a wake-up call for the insurance sector. While no immediate penalties have been imposed yet, these notices show the regulator is keeping a close watch on claim settlement practices and procedural transparency.

Policyholders are advised to:

• Review their health policies carefully,

• Stay updated on their insurer’s compliance track record, and

• Report delays or issues in claim processing to IRDAI's grievance redressal portal if needed.

This move may ultimately help raise industry standards and build greater trust among Indian insurance consumers.