New Delhi: The Insurance Regulatory and Development Authority of India (IRDAI) has initiated investigations into five major private health insurance companies over allegations of arbitrary premium hikes and unusually high claim rejection rates. This marks a decisive shift in the watchdog’s approach as it responds to growing public grievances and direct pressure from the Finance Ministry.
Uniform Premium Hikes and Rejection Rates Spark Investigation
Sources familiar with the matter revealed that the IRDAI’s action comes after long-standing scrutiny of these insurers for corporatized premium structuring, which has led to uniform increases across regions, regardless of local risk profiles or cost dynamics.
The alleged premium hike of nearly 30% has become a national concern, especially when claim rejection rates are also reported to be around 30%. This dual burden on policyholders — paying more while getting less — triggered alarm within the government, prompting the Finance Ministry to intervene and direct the IRDAI to initiate a formal probe.
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“The practices adopted by some insurers appear to prioritize profits over public service, which goes against the core principles of the insurance sector,” said a senior government official on condition of anonymity.
Star Health Already Under Scanner; Others Face Show-Cause Notices
Among the five unnamed companies, Star Health Insurance is already under investigation for similar allegations. The IRDAI, after reviewing detailed complaints and customer data, has reportedly issued show-cause notices to several companies involved.
According to government sources, regulatory penalties are expected within the next month, with at least one or two insurers facing immediate fines to serve as a deterrent across the industry.
The regulator is said to be examining:
- Patterns of premium pricing and whether they align with actuarial justifications
- The legitimacy of claim rejections and whether due process was followed
- Transparency and communication with policyholders regarding changes in terms
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Finance Ministry’s Tough Stance Aims to Restore Consumer Confidence
The Finance Ministry has expressed serious dissatisfaction with the current attitude of many private health insurers, particularly in light of increased consumer distress during and after the pandemic. Sources indicate that the ministry is monitoring IRDAI’s investigation closely and may demand a broader policy overhaul if the findings reveal systemic malpractice.
Consumer advocacy groups have welcomed the probe. “Health insurance must remain a safety net, not a corporate trap. Uniform hikes and arbitrary rejections destroy trust in the system,” said Anjali Sharma, spokesperson for the Citizens for Fair Health Insurance Forum.
The IRDAI has not publicly named the companies under investigation, but insiders confirm that strong punitive action, including monetary fines and compliance mandates, is on the horizon.