The Insurance Regulatory and Development Authority of India (IRDAI) issued an order against Care Health Insurance Ltd. following a remote inspection conducted between August and September 2021, which revealed multiple regulatory lapses. The insurer failed to provide policyholders with clear details of the competent Insurance Ombudsman, improperly applied hospital discounts in claim settlements, and did not consistently obtain patient signatures on claim documents. Additionally, there were deficiencies in vulnerability management, financial reporting, and reinsurance accounting practices, leading to overstated profits and solvency concerns. After examining submissions, personal hearings, and undertakings by the insurer, IRDAI imposed a penalty of Rs. 1 crore for non-compliance with claim processing regulations, and issued warnings for lapses in grievance communication, cyber security practices, corporate governance, and accounting standards. The insurer was directed to submit an action report within 90 days and ensure future compliance, with strict regulatory action warned in case of repetition.
Insurance Regulatory and Development Authority of India
Ref: IRDAI/E&C/ORD/MISC/138/12/2025 | Dated: 15th December 2025
Order in the matter of Care Health Insurance Ltd.
1. Based on the
1.1. Show Cause Notice (SCN) Ref. No. IRDA / E&C / 2022-23 / 704 / SCN/LR/072 dated 13th December, 2024 issued to M/s Care Health Insurance Ltd. (‘Insurer’ or ‘Company’) in connection with the remote inspection conducted by the Authority from 30th August 2021 to 9th September 2021.
1.2. Submissions made by the Insurer vide email dated 18th January 2025 in response to the aforesaid SCN.
1.3. Submissions made by the Insurer during the personal hearing held on 18th June, 2025, chaired by a panel of two whole-time members of the Authority – Shri Deepak Sood Member (Non-Life) and Shri P K Arora, Member (Actuary).
1.4. Further submissions made by the insurer post-hearing vide email dated 30th June 2025.
2. Background
2.1. The Authority had conducted a remote inspection on the Insurer from 30th August 2021 to 9th September 2021. The inspection report, inter alia, revealed certain violations of provisions of the Insurance Act, 1938 and Regulations, Guidelines and Circulars issued thereunder.
2.2. A copy of the inspection report was forwarded to the Insurer on 10th August 2022 seeking their response and the insurer submitted their response vide email dated 12th September 2022.
2.3. On examining the submissions of the Insurer, an SCN was issued on 13th December 2024. The Insurer replied to the SCN vide email dated 18th January 2025. As requested for by the Insurer, a personal hearing was granted to the Insurer on 18th June 2025 by the panel of two whole-time members of the Authority – Shri Deepak Sood Member (Non-Life) and Shri P K Arora, Member (Actuary).
2.4. On behalf of the Insurer, Shri Anuj Gulati, Managing Director and Chief Executive Officer, Shri Ambrish Jindal, Chief Financial Officer, Ms. Bhawana Jain, Chief Risk Officer, Dr KPS Oberoi (Head- Claims) and Shri Kolla Suresh, Head-IT, on behalf of the Authority, Shri R K Sharma (Chief General Manager), Shri Sanjay Kumar Verma (General Manager), Shri Manoj Asiwal (Deputy General Manager) and Shri Yash Arvind Patil (Assistant Manager) attended the hearing.
2.5. The submissions made by the Insurer in its email dated 12th September 2022 and the submissions made after SCN vide email dated 18th January 2025, submissions during the personal hearing on 18th June, 2025 and further submissions made post hearing vide email dated 30th June 2025 have been carefully considered by the Authority and are summarized below:
3. Charge-1 (Inspection Observation_A-11)
Violation of
3.1. Clause-5 (ii) of Annexure-I under Regulations-17 (2) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017.
3.2. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016.
4. Inspection Observation_A-11
4.1. It was observed that if the grievance is not resolved in favor of the policyholder, the insurer did not inform complainants of the option to take up the matter before insurance ombudsman giving details of the name and address of the Ombudsman of competent jurisdiction.
4.2. In the closure / claim repudiation letters, the insurer has only given the customer care number and email id. The letters did not give the next steps of detail of the name and address of Ombudsman of competent jurisdiction.
5. Summary of Insurer’s Submissions
5.1. The Insurer submitted that, in the grievance communication sent to the customers, the Company shared the Insurance Ombudsman details as a hyperlink because the information was variable in nature.
5.2. In response to the SCN, the insurer submitted that the company had redefined its process and began manually sharing Insurance Ombudsman details from December 27, 2024. The insurer also provided samples of communications sent to complainants, which included the details of insurance ombudsman.
5.3. During the personal hearing, the insurer’s attention was drawn to the email sent to the complainant on December 27, 2024 which included only a link to the Insurance Ombudsman rather than the specific name and address of the competent jurisdiction’s Insurance Ombudsman. The insurer admitted there were some gaps in their initial process.
5.4. The insurer submitted that further scoping for system development was also initiated and the same has become operational from 6th June 2025 and communication with specific ombudsman details have now been sent to the customers.
5.5. The insurer submitted an undertaking dated 30th June, 2025 signed by MD&CEO and the CCO that the process has been modified to include specific insurance ombudsman details in all grievances resolution letters as well as claim rejection letters issued by the Authority.
6. Issues and Concerns on Charge-1:
6.1. The insurer initially failed to provide Insured / complainants with the specific name and address of the competent jurisdiction’s Insurance Ombudsman. Instead, they only included a hyperlink. This is a significant lapse because access to grievance redressal mechanisms should be straightforward and unambiguous for policyholders. Relying solely on a hyperlink, even if the information is ‘variable,’ places an undue burden on the Insured / complainant to search for crucial details.
6.2. While the insurer stated that the process has been revised and that the required details of the ombudsman are now being shared, the panel found that the insurer remains non-complaint as the specific details namely, the name and address of the competent Insurance Ombudsman were not included in the resolution letters sent to the complainant which adversely affects the interests of the policyholders.
7. Decision on Charge -1
7.1. The Authority having noted the undertaking referred in para 5.5 above, hereby, warns the insurer for the following violations
(i) Clause-5 (ii) of Annexure-I under Regulations-17 (2) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017, and
(ii) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA/F&A/GDL/CG/100/05/2016 dated 18thMay 2016.
7.2. Any similar lapse in future shall be viewed sternly and stringent regulatory action shall be initiated.
8. Charge-2_Inspection Observation_B-14
Violation of
8.1. Clause 14.4(c) of circular no. IRDA/IT/CIR/MISC/301/12/2020 dated 30.12.2021.
8.2. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A/GDL/CG/100/05/2016 dated 18th May 2016.
9. Inspection Observation_B-14
9.1. As a part of Information and Cyber Security Policy, the insurer had conducted Vulnerability Assessment and Penetration Testing (VAPT) for its applications which were outsourced to IT Security firms.
9.2. The reported vulnerabilities have been patched and as per the verification test reported during 04.04.2020 to 25.02.2021, it was observed that 75 out of 290 observations were closed out of TAT. This includes 13 cases of critical and high severity level. Further, it was observed that even one of the vulnerabilities was opened after the completion of TAT.
10. Summary of Insurer’s Submissions:
10.1. The Insurer submitted that due to product dependency or complexity of integration etc. it took longer time for closure of observations.
10.2. The Company aims to resolve all observations within the agreed timeframe. If issues cannot be resolved within these timelines, the Company communicates this to the Information Security Risk Management Committee (ISRMC), along with the associated risks and compensatory controls, as per IRDAI Cyber Security Guidelines, 2023.
10.3. The insurer also submitted that all the critical/high level observations as identified before the inspection were closed and successfully implemented.
10.4. The insurer further submitted that as a defined process, these issues are then continuously monitored to ensure they are resolved and do not reoccur.
Post-hearing, the insurer submitted that the detailed status of vulnerability management as on 31st March 2025 was presented in the ISRMC held on 18th April 2025 and there were no observations pending closure.
11. Decision on Charges-2
11.1. The insurer is warned for the following violations
(i) Clause 14.4 (c) of the circular no. IRDA / IT / CIR / MISC / 301 / 12 / 2020 dated 30.12.2021; and
(ii) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A/GDL/CG/100/05/ 2016 dated 18th May 2016.
11.2. Further, the insurer is advised to place the present status to Risk Management Committee constituted by the Board and the actions taken report shall be submitted to the Authority within 90 days of this order.
12. Charge-3_Inspection Observations_C-15, C-16 & C-17
13. Inspection Observation_C-15
Violation of
13.1. Clause-2 (v) of Schedule-C and Clause-3 (vi) of Schedule-D under Annexure-22 of Circular Bearing Ref. No. IRDA / TPA / REG / CIR / 059 / 03 / 2016 dated 28th March 2016 read with Regulations-20 (5) of IRDAI (TPA – Health Services) Regulations, 2016.
13.2. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA/F&A/GDL/CG/100/05/2016 dated 18th May 2016.
14. Inspection Observation_C-15
14.1. While examining the Claim documents in case of cashless settlement, it was observed that the signatures of patient/attendant were not captured on summary bills and discharge summary of the hospitals.
15. Brief summary of Insurer’s submissions
15.1. The Insurer submitted that the Company prioritizes transparency and communication with customers throughout the entire claims process. Customers are copied on all communications between the Company and the hospital during claims processing.
15.2. While the Company has been working to implement signatures on discharge summaries and invoices, only 31% of documents have been signed by the customer/claimant. The Company continues to follow up with hospitals to improve this process but avoids raising queries on unsigned documents to prevent delays and customer hardship.
15.3. The Company supports the digitalization of the insurance industry for faster claim processing and has not received any customer grievances regarding unsigned documents.
15.4. The insurer reiterated post hearing that during claims processing customer is copied in all the communications done between the company and hospital including the pre-authorization approval, final discharge approval and settlement. In order to provide cashless approval within defined timelines, the company is following up with the hospitals for the signed discharge summary and invoices at the time of discharge of customer.
15.5. The insurer further submitted that they have made it mandatory for customer signatures to be present on discharge summary and final bill when the cashless claim is received for settlement from hospitals.
16. Inspection Observations_C-16
Violation of
16.1. Regulations-20 (9) (c) of IRDAI (Third Party Administrators – Health Services) Regulations, 2016.
16.2. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG/100/05/2016 dated 18th May 2016.
17. Inspection Observation_C-16
17.1. It was observed that the insurer reduced the claim amount by applying the deductions towards – (a) discount by hospital / network provider; and (b) difference in tariff.
17.2. However, it was observed that the hospital bills did not reflect, the discounts as deducted by the insurer, in the final hospitalization bills. Thus, the policyholder or the claimant was not aware of the actual bill raised by the hospital.
18. Brief summary of Insurer’s submissions
18.1. The insurer submitted that the Company provides a detailed breakdown of claim amounts paid to customers, including the claimed amount, break-up of the paid amount, and deductions including hospital discounts offered, if any.
18.2. The insurer further, stated that company passes the complete discount received from the network hospital as per the agreement without any retention to the company. Hence, there is no loss to the customer as the discount is applied on the amount payable as insurance claim.
18.3. The Company complies with IRDAI regulations by reflecting the discount in the final communication and applying it to the gross amount payable as insurance claim, with co-payment calculated after applying the discount.
18.4. Despite multiple reminders, some network hospitals have shown their inability to reflect discounts on their bills due to the reason that they work on different tariffs for different insurers/ entities as well as cash customers and would not be possible for them to incorporate the same within their IT framework as this would be a major change in their existing software. The Company continues to work with hospitals to address this issue.
18.5. Post personal hearing, the insurer submitted 16 settlement letters sent to the insured with details of deduction and discount.
19. Inspection Observation_C-17
Violation of
19.1. Regulations-33 (d) (ii) of IRDAI (Health Insurance) Regulations, 2016 to be read with Regulation (21) (3) (c) (i) of IRDAI (TPAs-Health Services) Regulations, 2016.
19.2. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016.
20. Inspection Observation_C-17
20.1. While examining the claims documents in respect of sample claims, it was observed that the settled amount was less than the final bill submitted by the hospital in respect of cashless claims.
20.2. It was observed that the insurer did not send the letters / communications addressed to the policyholder/claimant stating the details of paid claim amount against the claimed amount, and also the granular details of the payments made, amounts disallowed and the reasons thereof. The insurer only sent the letters addressed to the respective hospitals.
21. Brief summary of Insurer’s submissions
21.1. The insurer submitted that the Company, while processing cashless requests, sends a detailed Pre-authorization approval letter in the defined format giving details of deduction as well as Hospital tariff and discounts. This letter is addressed to the hospital since the payment of the cashless claim is made to the hospital.
21.2. However, the same pre-authorization letter is also sent to the registered customer email ID. The customer is also updated on the status of his claim through SMS and WhatsApp.
21.3. The insurer further submitted that customers can also access the letter and details of the claim on Company’s Customer Portal and Mobile App.
21.4. As far as the claim settlement letter to the claimant is concerned, the insurer submitted, post-hearing, that when the final settlement is made to the hospitals, this communication is also copied to the customers. The insurer also submitted 14 email communication logs to support this claim in respect of the cases documented in the observation.
21.5. Post personal hearing, the insurer also submitted that the Company has started sending separate communication addressed to customers / claimants over and above the communication being sent to Hospitals.
22. Issues and Concerns on Charge-3 (Inspection Observations C15, C16 and C-17)
22.1. The insurer has admitted that they obtained signatures from the patient or its attendant on summary bills and discharge summaries in only 31% of claims. This means that in 69% of cases, the insurer failed to adhere the stipulation stated in the circular in this regard.
22.2. Such gross failure to obtain signatures not only exposes glaring deficiencies in the insurer’s internal processes but also raises concerns regarding transparency in respect of settlement of the claims. This level of negligence is unacceptable as it reflects a disregard for the interests and rights of policyholders, potentially eroding trust in the insurer’s commitment to fair and transparent claims settlement.
22.3. The absence of discounts in the final bills suggests that the insurer has failed to meet regulatory requirements and to treat the customer fairly.
22.4. The insurer in response to the inspection observation and also in response to SCN stated that only the pre-authorization letters were addressed to hospitals since the payment is to be made to hospitals. However, a copy of the same is also sent to the registered customer email id. It is noted that neither in response to inspection report nor in response to SCN, the insurer stated that copy of the final claim settlement letter is also marked to customers. However, in personal hearing, the insurer contradicted their earlier statement and stated that final settlement letter is sent to the hospital with a copy to the customer. On this, during the personal hearing, the insurer was advised to provide copies of all emails marked to the policyholders that related to the 14 samples referred in the inspection report. The insurer has failed to submit the same and only submitted logs of email claimed to have sent to such policyholders.
22.5. With regard to communication addressed to the claimants or policyholders in cases of admissible claims (full or partial), the insurer has demonstrated a disregard for regulatory expectations by failing to provide any credible proof of sending or dispatching such communications. Instead of furnishing actual evidence, the insurer merely submitted email logs, which do not constitute sufficient or reliable proof. This careless and inadequate approach raises serious concerns about the insurer’s transparency and accountability.
22.6. Furthermore, the insurer failed to assure the Authority that claimants or policyholders received clear and detailed information regarding payments made, amounts disallowed, and the specific reasons for such decisions. Such negligence not only undermines regulatory comfort but also exposes policyholders to unfair treatment and a lack of clarity about their claims. This level of non-compliance is unacceptable and reflects poorly on the insurer’s commitment to fair and responsible customer service.
22.7. The insurer admitted that discounts offered by network hospitals are applied only to the amount admissible as insurance claim, while the disallowed / inadmissible portion of the bill is excluded from any discount. This practice is fundamentally flawed and grossly unfair, as it results in policyholders being unjustly deprived of the full benefit of discounts that should have been applied to the entire hospital bill. Such conduct not only violates the principle of fair treatment but also demonstrates a clear disregard for the policyholder’s financial interests. This is a serious lapse that raises concerns about the insurer’s commitment to regulatory compliance and ethical business practices. The insurer’s approach effectively treats policyholders unfairly and undermines trust in the insurance process.
23. Decision on Charge 3
23.1. In view of the above, in exercise of the powers vested under Section 102 of the Insurance Act 1938, the Authority hereby imposes a penalty of Rs.1 Crore (Rupees-One Crore) for the violation of:
23.1.1. Clause-2 (v) of Schedule-C and Clause-3 (vi) of Schedule-D under Annexure-22 of Circular Bearing Ref. No. IRDA / TPA / REG / CIR / 059 / 03 / 2016 dated 28th March 2016 read with Regulations-20 (5) of IRDAI (TPA – Health Services) Regulations, 2016,
23.1.2. Regulations-20 (9) (c) of IRDAI (Third Party Administrators – Health Services) Regulations, 2016 and Regulations-33 (d) (ii) of IRDAI (Health Insurance) Regulations, 2016 to be read with Regulation (21) (3) (c) (i) of IRDAI (TPAs-Health Services) Regulations, 2016, and
23.1.3. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016.
24. Charge-4 (Inspection Observation_E-18)
Violation of
24.1. Para-12 (ii) of Part IV of Schedule-B of IRDA (Preparation of Financial statements and Auditor’s report of insurance companies) Regulations, 2002 Para (1) of Part V of Schedule B to be read with Schedule – 1 of IRDA (Preparation of Financial statements and Auditor’s report of insurance companies) Regulations, 2002.
24.2. Regulations-6 of IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance Business) Regulations, 2016.
24.3. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA/F&A/GDL/CG/100/05/2016 dated 18th May 2016.
25. Inspection Observation_E-18
25.1. While examining the reinsurance agreement of the insurer with GIC Re in respect of ‘retail health quota share treaty’ (treaty), it was observed that the rate was mentioned as ‘original net risk rates (net of commissions and expenses). As per Article 8.1 and Item No.9 of the Schedule Treaty, the commission & expenses were ‘NIL’ and not applicable to this treaty.
25.2. It may also be noted that the insurer had the reinsurance agreement (treaties) for all the three financial years. However, for reference purpose and analysis, the agreement for FY 2020-21 is considered whereas the other two treaties namely ‘Travel Health Quota Share Treaty’ and ‘Individual PA Surplus Treat’ were also on the similar lines.
25.3. It is observed that the insurer has accounted the treaty on gross up basis on the grounds that since the treaty has been defined at a net rate post deduction of expenses and commissions, the difference between the gross rate and net rate will be for commission and expenses.
25.4. It was observed that the commission ratio (commission received for RI business ceded) under ‘retail health quota share treaty’ was very high at 62%, 63% & 70% during the FYs 2020-21, 2019-20 & 2018-19 as per the following details:
| FY | Retail Health Quota Share Treaty | Other RI arrange-ments | Total | |
| 2020-21 | RI Premium ceded | 470 | 138 | 607 |
| Commission Received | 292 | 35 | 327 | |
| Commission Ratio | 62% | 25% | 54% | |
| 2019-20 | RI Premium ceded | 353 | 430 | 783 |
| Commission Received | 221 | 58 | 279 | |
| Commission Ratio | 63% | 13% | 36% | |
| 2018-19 | RI Premium ceded | 264 | 314 | 578 |
| Commission Received | 184 | 57 | 241 | |
| Commission Ratio | 70% | 18% | 42% |
25.5. Further, the insurer has not maintained consistency in accounting in books and for payment of GST as the insurer paid GST only on the ‘reinsurance premium ceded’ calculated as per the treaty terms, and not on the ‘reinsurance premium ceded’ as shown in the financials.
26. Brief Summary of Insurer’s submissions
26.1. The insure submitted that the Company’s reinsurance program is approved by the Board of Directors, with treaties primarily placed with GIC Re. Clause-7 of the treaty specifies that these rates are Net of Commission and Expenses.
26.2. The difference between Gross and Net Rates is due to Commission and Expenses, which the Company accounted for as reinsurance commission, following industry practice. This policy is disclosed in the audited financial statements, as no specific guidelines mandate a particular accounting treatment for net-rate treaties.
26.3. While accounting, the premium was calculated using a risk proportion on the gross written premium, with the difference recognized as reinsurance commission.
26.4. The Company’s accounting practices align with industry standards and accurately reflect the reinsurance arrangements. Solvency margin statements have been prepared as per Authority guidelines and certified by the Statutory Auditor.
26.5. The financial statements for the Health Insurance business, including Balance Sheet, Profit and Loss, Receipts and Payments, and Revenue Account, were prepared and audited in accordance with IRDAI regulations and certified by the Statutory Auditors.
26.6. The Company has complied with these provisions, claiming only the ITC matching the tax invoices, and has not claimed excess ITC on reinsurance premiums. All taxes paid and ITC claimed are reflected in the Company’s GSTR-2B on the GSTN portal, ensuring no loss to revenue authorities.
26.7. During the personal hearing, the insurer submitted that the Company has discontinued the said net rate treaties with GIC Re w.e.f. FY 2023-24. The insurer also submitted an undertaking dated 30th June 2025 duly signed by Chief Executive Officer and Chief Compliance Officer confirming that as on date, Company does not have any net rate treaties with any reinsurer.
27. Issues and Concerns on charge-4
27.1. The ‘commission’ stated in the treaty is ‘nil’. This means that neither the commission nor the expenses are applicable to the treaty. The insurer was not supposed to “gross up” the rate and account for on that basis. The insurer incorrectly treated the difference between gross and net rates as reinsurance commission, without providing a clear explanation or justification for this calculation.
27.2. By adopting such practice, the insurer has, in fact, booked the profit in the year 1 which otherwise would have been deferred in the next year. Thus, resulting into overstatement of profit and solvency in the year. This represents a serious lapse and a significant cause of concern.
27.3. This also constitutes a cause of concern, as the insurer’s overstatement of ceded premiums and miscalculation of commissions have most likely distorted key financial ratios and might have understated liabilities, thereby impacting solvency ratios. The insurer’s assertion that the “RSM reflects a true picture” is not substantiated with sufficient supporting documentation. More so, when net premium reduced by the grossed up reinsurance ceded has been taken for the purpose of computation of RSM 1.
27.4. Additionally, this demonstrates inconsistency in the insurer’s approach to both tax payments and premium accounting. This inconsistency has resulted in a significant discrepancy in the loss ratio reported in the financial statements of both the insurer and the reinsurer.
27.5. The above lapses point to a significant deficiency in upholding the principles of sound corporate governance, particularly in the areas of transparent, accurate, and consistent financial reporting and the enforcement of robust internal control systems. These lapses not only breach essential regulatory and governance expectations but also hinder the insurer’s ability to implement prudent risk management practices.
28. Decision on Charge 4
28.1. In view of the above, the insurer is warned for the following violations: 28.1.1. Para-12 (ii) of Part IV of Schedule-B of IRDA (Preparation of Financial statements and Auditor’s report of insurance companies) Regulations, 2002,
28.1.2. Para (1) of Part V of Schedule B to be read with Schedule – 1 of IRDA (Preparation of Financial statements and Auditor’s report
of insurance companies) Regulations, 2002,
28.1.3. Regulations-6 of IRDAI (Assets, Liabilities, and Solvency Margin of General Insurance Business) Regulations, 2016, and
28.1.4. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No.IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016.
Any similar lapse in future shall be viewed sternly and stringent regulatory action shall be initiated.
29. Charge-5 (Inspection Observation_G-38)
Violation of
29.1. Regulations-8(1) of the IRDAI (Protection of Policyholders Interest), Regulations, 2017.
29.2. Clause-2(1)(f) of IRDAI Master Circular IRDAI/F&A/Circ/Misc./173/ 07/2017 dated 25th July 2017.
29.3. Clause 4(b) & 5 of the IRDAI Circular No. IRDAI/INSP/CIR/ONS/ 157/09 /2018 dated 19th Sept 2018.
29.4. Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No.IRDAI / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016.
30. Inspection Observation_G-38
30.1. It was observed that Unidentified proposal deposits of Rs.1.06 crore received from proposers, held in the unallocated premium account for more than 6 months and the same was not transferred to unclaimed amounts as of 31st March 2021. It was also observed that the insurer received proposal deposit/s without obtaining the proposal forms from customers as evidenced by the status of unidentified proposal deposits.
30.2. In this connection, the insurer submitted that the reconciliation exercise with the broker/insured takes some time, and until that time, the amount remains as an open credit, i.e., unidentified proposal receipts received from the policyholder’s account.
31. Brief Summary of Insurer’s submissions
31.1. With regard to unclaimed amount, it is submitted that any premium received in advance / deposits / unallocated premium during the currency of the policy shall not be considered as ‘Unclaimed amount’.
31.2. However, where the premium received in advance/unallocated premium has neither been set off/adjusted against the premium during the currency of the policy nor has been refunded within six months from the expiry of the policy, such amount shall be considered as unclaimed. Accordingly, it is submitted that Rs. 1.06 Crores received from the proposer does not qualify to be unclaimed amount of policyholder.
31.3. Regarding the Underwriting Policy, it has been revised to include a section on ‘Refunding of Advance Premium collected,’ and the Company aims to refund un-booked premiums within 90 days, as stated in previous correspondence on September 12, 2022.
31.4. Unallocated premium as of March 2021 was 3.1% of GWP and has reduced to 1.8% in FY 23-24, reflecting improved processes.
31.5. Post-hearing, the insurer submitted an undertaking dated 30th June 2025 duly signed by Chief Executive Officer and Chief Compliance Officer that out of total unallocated amount as observed during inspection, Rs.20 lakh is outstanding as on 30th June 2025. Even though the specific information is not available for mandatory display on website and other regulatory compliances, the said amount has been transferred to unclaimed amount of policyholders.
32. Issues and Concerns on Charge 5
32.1. The insurer’s interpretation that “any premium received in advance, deposits, or unallocated premium during the currency of the policy shall not be considered as ‘unclaimed amount’” is not only fundamentally flawed but also demonstrates a blatant disregard for regulatory guidelines and policyholder interests. Any amount that has not been refunded to the policyholders due to non-contactability within the specified time period of six months (now one year) shall be classified as an “unclaimed amount” and shall be dealt with in accordance with the provisions of the Master Circular issued in this regard.
32.2. It is highly alarming and unacceptable that, after receiving the proposal deposit, the insurer has failed to issue the policy for various reasons and has also neglected to transfer such amount to the unclaimed account. This blatant disregard for proper procedure is a serious red flag regarding the insurer’s conduct.
32.3. It is entirely inappropriate and unethical for the insurer to retain such funds indefinitely. Such practices not only undermine trust but also raise significant concerns about the insurer’s governance and compliance culture.
32.4. The submissions of the insurer are taken on record, noting that they have now transferred the unidentified proposal deposit of Rs. 20 lakh to the unclaimed amount as of 30th June 2025.
33. Decision on Charge 5
33.1. In view of the above, the insurer is advised to put in place appropriate internal controls and strictly adhere to all extant regulations and guidelines issued by the Authority.
33.2. Any similar lapse in future shall be viewed sternly and stringent regulatory action shall be initiated.
34. Summary of Decisions:
| Charge No. |
Violation of Provisions | Decision |
| 1 | Inspection Observations_A-11
a) Clause-5 (ii) of Annexure-I under Regulations-17 (2) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017. b) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100/05/2016 dated 18th May 2016. |
Warning |
| 2 | Inspection Observation_B-14
c) Clause 14.4 (c) of circular no. IRDA / IT / CIR / MISC / 301 / 12/2020 dated 30.12.2021. d) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016. |
Warning & Advisory |
| 3 | Inspection Observation_C-15
a) Clause-2 (v) of Schedule-C and Clause-3 (vi) of Schedule-D under Annexure-22 of Circular bearing Ref. No. IRDA / TPA / REG / CIR / 059 / 03 / 2016 dated 28th March 2016 read with Regulations-20 (5) of IRDAI (TPA – Health Services) Regulations, 2016. e) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100 / 05 / 2016 dated 18th May 2016. |
Penalty of Rs. One Crore |
| Inspection Observation_C-16
a) Regulations-20 (9) (c) of IRDAI (Third Party b) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG/100/05/2016 dated 18th May 2016. |
||
| Inspection Observation_C-17
f) Regulations-33 (d) (ii) of IRDAI (Health Insurance) Regulations, 2016 to be read with Regulation (21) (3) (c) (i) of IRDAI (TPAs-Health Services) g) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100/05/2016 dated 18th May 2016. |
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| 4 | Inspection Observation_E-18
h) Para-12 (ii) of Part IV of Schedule-B of IRDA (Preparation of Financial statements and Auditor’s report of insurance companies) Regulations, 2002 i) Para (1) of Part V of Schedule B to be read with Schedule – 1 of IRDA (Preparation of Financial statements and Auditor’s report of insurance companies) Regulations, 2002. j) Regulations-6 of IRDAI (Assets, Liabilities, and k) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA / F&A / GDL / CG / 100/05/2016 dated 18th May 2016. |
Warning |
| 5 | Inspection Observation_G-38
a) Regulations-8(1) of the IRDAI (Protection of Policyholders Interest), Regulations, 2017. b) Clause-2(1)(f) of IRDAI Master Circular IRDAI / F&A / Circ / Misc./173/ 07/2017 dated 25th July 2017. c) Clause-6 of Authority’s Guidelines on Corporate Governance bearing Ref. No. IRDA I / F&A / GDL / CG / 100/05/2016 dated 18th May 2016. |
Advisory |
35. The penalty amount of Rs, 1 Crore (Rupees One Crore) shall be remitted by debiting the shareholders’ account within a period of forty-five days from the date of receipt of this order through NEFT/RTGS (details of which will be communicated separately). An intimation of remittance shall be sent to Mr. Sanjay Verma, General Manager, Enforcement and Compliance Department of IRDAI at email id – enforcement@irdai.gov.in with a copy to accounts@irdai.gov.in.
36. Further,
a) The Order shall be placed before the Board of the Insurer in the upcoming Board Meeting and the Insurer shall provide a copy of the minutes of the discussion.
b) The Insurer shall submit an Action Taken Report to the Authority on direction given within 90 days from the date of this Order.
37. If the Insurer feels aggrieved by this Order, an appeal may be preferred to the Securities Appellate Tribunal as per the provisions of Section-110 of the Insurance Act, 1938.
Deepak Sood
Member (Non-Life)
P K Arora
Member (Actuary)
Place: Hyderabad
Dated: 15th December 2025
