The government is in discussion with the Insurance Regulatory and Development Authority of India (IRDAI) to scale up inspections of both public and private health insurers and penalise those failing to comply with regulatory norms amid growing concerns over arbitrary premium increases and denial of claims, sources said.
Drawing a parallel with the Reserve Bank of India’s (RBI) robust inspection framework, the government is pushing IRDAI to strengthen its supervisory systems to ensure policyholders receive timely and fair treatment.
“Like RBI’s inspection department is very, very strong, the government’s aim is that IRDAI’s inspection department should also be strong on those lines,” the official said on condition of anonymity.
The directive comes as health insurance emerges as the segment with the highest volume of consumer complaints, particularly around delays in hospital claim approvals and pre-authorisation processes, a senior government official said.
The move follows a review meeting chaired by the Prime Minister’s Office (PMO) on May 20, which flagged slow growth in health insurance coverage and a spike in premiums, especially for retail policies. According to data released by IRDAI in February, total health insurance coverage touched 57.29 crore individuals by the end of FY24 — only 4.2 percent higher than the previous year.
“It’s work in progress. Health insurance claim and premium is also an issue. The government is in discussion with the health insurance industry on why claims are being rejected. Fair claims should be given, and premium rates should not be unreasonable. If there is a hike, it should be justified,” the official added.
IRDAI has, so far, inspected six to seven insurance companies, covering both public sector and private players, with further inspections planned in the coming months. The focus is primarily on ensuring fair claim settlement and timely hospital approvals.
Enforcement timeline
A key regulation under the scanner is the one-hour timeline for pre-authorisation approvals — a critical step for cashless hospitalisation. When a patient is admitted for treatment under a cashless policy, the hospital must seek approval from the insurer before proceeding. As per IRDAI norms, insurers are mandated to respond to these requests within one hour.
“If someone is not doing it and there is a recurrent pattern, then IRDAI has to go for a penalty. That is going on,” the official said.
This requirement, laid out in IRDAI’s master circular, is aimed at preventing treatment delays and ensuring a seamless experience for policyholders at hospitals. Non-compliance with this timeline is considered a violation and can attract regulatory action if patterns emerge across cases or insurers.
Push for accountability
The government has emphasised that increased oversight is essential not only to curb malpractice but also to boost consumer confidence in health insurance products. The government is keen to ensure insurers adhere to fair practices.
While IRDAI has introduced measures to standardise health products and strengthen grievance redress mechanisms, enforcement has been inconsistent. The government push is expected for the regulator to carry out more frequent field inspections and data-based monitoring, leading to a more accountable ecosystem.
“The claim should be fairly paid. Complaints that claims are not being paid keep coming, that’s why inspections are happening,” the official added.
The inspection drive covers both public sector general insurers as well as private sector players who have significant presence in the health insurance space on the basis of complaints regarding slow cashless processing, reduced pay-outs, and premium restructuring.
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