The Insurance Regulatory and Development Authority of India (IRDAI) may be considering introducing time-bound claim settlement norms for health insurers following its decision to bring in industry bodies CII and FICCI to mediate the escalating dispute between insurers and hospital groups, sources familiar with the matter told Moneycontrol.
Time-bound claim settlement rules may require insurers and hospitals to adhere to fixed deadlines for critical processes such as cashless approval, settlement of discharge claims and reimbursement payments.
Sources said, these rules are intended to address long-standing complaints of delayed settlements, prolonged disputes and unpredictable claim deductions that have soured relations between both sides and affected the experience of policyholders.
The proposal was discussed during a closed-door meeting held earlier this week in New Delhi between the IRDAI Chairman Ajay Seth, senior executives of leading health insurance companies and representatives of hospital associations.
In this consultation, IRDAI is believed to have formalised the involvement of Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) as neutral mediators to facilitate structured dialogue and consensus-building.
Why IRDAI is escalating its intervention
According to people present at the meeting, repeated rounds of discussions between insurers and hospital networks failed to resolve core areas of disagreement including payment timelines, unilateral claim deductions and revision of package rates.
This continuing impasse has already triggered multiple suspensions of cashless services by hospitals, underscoring the real-world disruption being inflicted on policyholders.
For instance, since August 16, 2025, Niva Bupa Health Insurance’s cashless treatment facility at all branches of Max Hospitals was suspended, forcing policyholders to pay upfront and seek reimbursement instead of enjoying cashless admission.
Similarly, Tata AIG General Insurance Company, after demands for tariff reduction, pulled out of its cashless agreement with Max Hospitals on September 10, 2025, making it the third insurer (after Star Health Insurance and Niva Bupa) to suspend cashless claims at the hospital chain.
Earlier, on September 1, 2025, a broad set of more than 15,000 hospitals, including premier providers like Max and Medanta, under the umbrella ofthe Association of Healthcare Providers India (AHPI), had suspended cashless treatment for policyholders of Bajaj Allianz General Insurance Company, citing low reimbursement rates and arbitrary deductions as unsustainable under current medical-cost inflation conditions.
Hospital bodies have argued that rising operational costs, including manpower, equipment and compliance expenses, are not being reflected in current reimbursement structures. Insurers, however, have blamed rising medical inflation and inconsistent billing practices for ballooning claim ratios and deteriorating profitability of health insurance products.
Sources said IRDAI grew increasingly concerned that continued standoff could destabilise the cashless insurance infrastructure, which millions of policyholders depend on for hospitalisation without upfront payments. The regulator’s immediate objective is to prevent disruption, while its longer-term aim is to restore trust and introduce predictability into the claims process.
What “time-bound claim settlement” could mean
While formal guidelines are still under consideration, official sources indicated that the framework being explored could include standard timelines for key stages in the claims process. These may cover cashless authorisation approvals following hospital admission, settlement of claims after patient discharge, clear communication and justification for any deductions made, and time-bound resolution of disputed claims or escalations.
By defining specific timeframes for each of these stages, IRDAI aims to reduce ambiguity and rein in delays that frequently trigger friction between hospitals and insurers, sources said. Greater clarity on when approvals and payments are expected could help prevent prolonged stand-offs and improve predictability for both healthcare providers and policyholders.
Emails sent to IRDAI seeking confirmation on this development did not elicit any response till the time of publishing.
Mediators asked to build consensus architecture
Sources also said, the CII and FICCI have been tasked with steering negotiations in a structured and representative manner. Their mandate is not limited to resolving the immediate dispute, but also to help design a dispute-resolution architecture that can prevent future deadlocks.
Their role includes consolidating feedback from hospital associations and insurers, identifying overlapping concerns, and proposing workable frameworks on claims procedures, rate rationalisation and service protocols.
These recommendations will then be reviewed by IRDAI to determine whether they should be translated into formal regulatory guidelines.
Although the formal inclusion of FICCI has not yet been publicly notified, stakeholders have been informally directed to engage through these bodies for balanced negotiation, sources said.
Emails were also sent to FICCI and CII seeking confirmation, but no response was received.
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