Insurance regulator - Insurance Development and Regulatory Authority (IRDA) is soon coming up with a separate health insurance claims settlement regulation, which would address issues arising out of claims not honoured by the insurers in a time bound manner. Presently there is no separate provision for the health insurance claim settlement.
The IRDA is working on a draft regulation and it is expected to be put up on the regulator's website for comments and suggestions by April 30, 2012.
A public interest litigation was filed by a Mumbai-based insurance activist in February 2011 against IRDA which said "there are a great deal of inconsistencies and violations in the health insurance industry, which are directly detrimental to the interests, health and financial well being of crores of Indian consumers." The fight between the hospitals and insurers and their third party administrators (TPAs) should not impact consumers, it said.
After hearing the petition last month, a division bench of Chief Justice Mohit Shah and Justice Roshan Dalvi said in its order, "We expect that the IRDA will display the draft regulations for healthcare on its website as soon as possible preferably by April 30th, 2012."
There are currently more than 7 crore health insurance customers with a total premium of Rs. 11,000 crore. Out of the 4 public sector general insurers, New India Insurance incurred a loss of Rs 422 crore in FY '11 and the rest were making profits. Out of the 15 private non-life insurance companies only 2 made profits. The net loss of the general insurance industry was Rs 1,019 crore for the last financial year.
There have been number of cases where insurers were accused by the customers for denying, delaying or reducing claim amounts deliberately.
In 2010, the 4 public health insurance companies, having a 60% share of the total market, struck off a large number of hospitals from their Preferred Partner Network (PPN) in almost all metros. PPN hospitals provide cashless medical facility under the health insurance policy. Insurers alleged that there were some hospitals who along with the patients were inflating the medical bills and some TPAs were also involved in this.
There is documentary evidence of some insurance companies providing incentives to their TPAs to lower the amount claimed by a customer. Experts, however, feel that when there are mechanisms the IRDA has developed to deal with claims, there is no need for a new set of regulations.