IRDAI Imposed Fine of ₹1 Crore on Care Health Insurance for Claim Settlement Lapses

The Insurance Regulatory and Development Authority of India (IRDAI) has imposed a ₹1 crore penalty on Care Health Insurance for serious lapses in insurance claim settlement processes and policyholder communication standards, as per news reports. 

The order, dated December 15, 2025, follows a remote inspection revealing multiple governance violations. 

₹1 Crore Penalty for Claims Settlement and Communication Failures 

IRDAI's inspection highlighted several shortcomings in Care Health Insurance’s claims handling. In multiple cases, patient or attendant signatures on hospital discharge summaries and bills were missing. The insurer made claim deductions based on hospital discounts and tariff differences which were not clarified to policyholders. 

Further, the insurer failed to provide policyholders with the final hospital bill and did not issue detailed settlement letters explaining deductions. Communication regarding settlements was made to hospitals but not adequately shared with insured members. Only 31% of claims had the required hospital documentation, which IRDAI deemed insufficient. 

IRDAI Identifies Additional Governance Failures 

Besides the ₹1 crore fine for lapses in claim transparency, IRDAI issued warnings related to four other areas: grievance redressal, cybersecurity, reinsurance accounting, and handling of unidentified premium deposits. 

Grievance closure letters excluded proper references to the Insurance Ombudsman, instead providing a generic hyperlink and basic contact lines. Cybersecurity issues identified during an earlier inspection were not addressed within deadlines. Furthermore, reinsurance records were found to be presented in a way that overstated the insurer’s financial position. 

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Failure in Handling Proposal Deposits 

IRDAI also pointed out that ₹1.06 crore, received as proposal deposits, remained in unallocated premium accounts beyond 6 months. These were not moved to unclaimed amounts, falling short of policyholder protection norms. 

Care Health argued its communications included relevant links for ombudsman details and admitted to gaps in documentation. It claimed efforts are being made to address system-driven limitations and streamline communication with hospitals. 

Conclusion 

IRDAI’s decision underscores the importance of transparent claims communication and thorough documentation. Care Health Insurance has been directed to pay the ₹1 crore penalty within 45 days and report the compliance to its Board within 90 days. 

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