IRDAI – Order in the matter of Care Health Insurance Ltd.

The Insurance Regulatory and Development Authority of India (“ IRDAI ”/“ Authority ”) issued an order in the matter of M/s Care Health Insurance Limited (hereinafter referred to as the “ Insurer ” / “ Company ”) vide order bearing reference number IRDAI/E&C/ORD/MISC/138/12/2025 dated December 15, 2025 (“ Order ”), with respect to the remote inspection conducted by the Authority from August 30, 2021 to September 9, 2021. The Show Cause Notice (“ SCN ”) was issued by the Authority dated December 13, 2024, and the reply of the Insurer to the SCN was vide email dated January 18, 2025, and further submission post hearing was made by the Insurer vide email dated June 30, 2025.

The observations raised by the Authority and decisions thereon are summarised below for your reference:

Charge

Violation

Observation of the Authority

Decision of the Authority

Charge–1

(Inspection Observation A-11)

Violation of:

Clause-5(ii) of Annexure-I under Regulation 17(2) of IRDAI (Protection of Policyholders’ Interests) Regulations, 2017 (“ PPHI Regulations ”), that reads as follows:

‘Where the grievance is not resolved in favour of the policyholder or partially resolved in favour of the policyholder, the insurer shall inform the complainant of the option to take up the matter before insurance ombudsman giving details of the name and address of the Ombudsman of competent jurisdiction.’

Clause-6 of IRDAI Guidelines on Corporate Governance, 2016 (“ CG Guidelines ”).

‘Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations.

The Authority observed that:

• The insurer failed to inform complainants of the option to approach the Insurance Ombudsman when grievances were not resolved in their favour.

The insurer failed to inform complainants of the option to approach the Insurance Ombudsman when grievances were not resolved in their favour.

• Closure / claim repudiation letters only contained customer care contact details and did not include the name and address of the Ombudsman of competent jurisdiction.

Closure / claim repudiation letters only contained customer care contact details and did not include the name and address of the Ombudsman of competent jurisdiction.

• 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.

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.

Warning

The Authority warned the insurer for the violations of the below provisions:

• Clause-5(ii) of Annexure-I of PPHI Regulations

Clause-5(ii) of Annexure-I of PPHI Regulations

• Clause 6 of CG Guidelines

Clause 6 of CG Guidelines

Further, any similar lapse in future shall be viewed sternly, and stringent regulatory action shall be initiated.

Charge–2

(Inspection Observation B-14)

Violation of:

Clause 14.4(c) of IRDAI Circular on Amendments to the Guidelines on Information and Cyber Security for Insurers dated 07.04.2017 (“ CS Circular ”) bearing Ref. No. IRDA/IT/CIR/MISC/301/12/2020 dated December 30, 2021

‘For closure of identified gaps in all internet facing applications and Infrastructure components, External Black Box Penetration Testing should be done within one month, followed by confirmatory testing to ensure closure of such identified gaps.’

Clause-6 of the CG Guidelines.

‘Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

• appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

• appropriate internal controls to ensure that the risk management and compliance policies are observed;

appropriate internal controls to ensure that the risk management and compliance policies are observed;

The Authority observed that:

• The insurer had conducted Vulnerability Assessment and Penetration Testing (VAPT) for its applications which were outsourced to IT Security firms.

The insurer had conducted Vulnerability Assessment and Penetration Testing (VAPT) for its applications which were outsourced to IT Security firms.

• Vulnerability Assessment and Penetration Testing (VAPT) observations were closed beyond the prescribed TAT.

Vulnerability Assessment and Penetration Testing (VAPT) observations were closed beyond the prescribed TAT.

• 75 out of 290 observations, including 13 critical/high severity vulnerabilities, were closed out of TAT, and one vulnerability was reopened after TAT expiry.

75 out of 290 observations, including 13 critical/high severity vulnerabilities, were closed out of TAT, and one vulnerability was reopened after TAT expiry.

Warning and Advisory

The insurer was warned for the violations of following provisions:

• Clause 14.4(c) of CS Circular.

Clause 14.4(c) of CS Circular.

• Clause 6 of CG Guidelines.

Clause 6 of CG Guidelines.

Insurer is advised to place the current status before the Board-level Risk Management Committee and submit an Action Taken Report to the Authority within 90 days .

Charge–3

(Inspection Observations C-15, C-16 & C-17)

Violation of:

Clause-2(v) of Schedule-C and Clause-3(vi) of Schedule-D under Annexure-22 of IRDAI Circular dated March 28, 2016 (“ 2016 Circular ”) read with Regulation 20(5) of IRDAI (TPA – Health Services) Regulations, 2016 (“ TPA Health Regulations ”)

Clause 2(v), Schedule C under Annexure 22-

‘Standard Contents of Discharge Summary Format

• Name & Signature of Patient / Attendant.’

Name & Signature of Patient / Attendant.’

Clause 3(vi), Schedule-D under Annexure 22-

‘Explanation and Guidelines – Summary Bill

• The patient / attendant signature is mandatory on the summary bill

The patient / attendant signature is mandatory on the summary bill

Regulation 20(5) of the TPA Health Regulations-

The agreement shall contain following clauses –

• its termination by either party on mutual consent or on grounds of any fraud, misrepresentation, deficiency of services or other non-compliance or default. However, there shall be no clause in the Agreement which shall dilute, restrict or otherwise modify the regulatory stipulations mentioned by the Authority in respect of policyholders’ interests, protection, service standards and turn-around-time parameters.

its termination by either party on mutual consent or on grounds of any fraud, misrepresentation, deficiency of services or other non-compliance or default. However, there shall be no clause in the Agreement which shall dilute, restrict or otherwise modify the regulatory stipulations mentioned by the Authority in respect of policyholders’ interests, protection, service standards and turn-around-time parameters.

• prescribing the minimum Turn Around Time envisaged for rendering various policy services stipulated in the terms and conditions of the policy contract:

prescribing the minimum Turn Around Time envisaged for rendering various policy services stipulated in the terms and conditions of the policy contract:

Provided that the Turn Around Times stipulated shall at no point of time exceed the minimum norms prescribed in any of the regulatory requirements.

• the remuneration payable to the TPA by an Insurer.’

the remuneration payable to the TPA by an Insurer.’

Regulation 20(9)(c) of the TPA Health Regulations-

‘In order to implement the above Regulations, every Insurer and the TPA shall put in place the following procedures:

• The insurers and TPAs shall mandate the hospitals to reflect such agreed discounts in the final hospitalization bill of each claim, by which the policyholder or the claimant can also be aware of the actual bill raised by the hospital.

The insurers and TPAs shall mandate the hospitals to reflect such agreed discounts in the final hospitalization bill of each claim, by which the policyholder or the claimant can also be aware of the actual bill raised by the hospital.

Regulation 33(d)(ii) of IRDAI (Health Insurance) Regulations, 2016

‘ Where claims are directly handled by the Insurers, the provisions of Regulation (21) (3) (c) (i) of IRDAI (TPA-Health Services) Regulations, 2016 shall be complied in the correspondence to the policyholder with respect to settlement of the claims.’

Regulation 21(3)(c)(i) of TPA Health Regulations

In case of admissible claim, full or partial: In the communication addressed to the policyholder or claimant, the TPA shall state clearly the following:

a) “Your claim bearing No against policy issued by has been settled for Rs against the Amount Claimed for Rs towards Medical Expenses incurred for treatment of at for the period from to ”:

b) The granular details of the payments made, amounts disallowed and the reasons there for.

c) The details of (i) Grievance Redressal Procedure in place with the insurer (ii) Contact details of concerned Grievance Redressal Office and officer (iii) Procedure to be followed for approaching Insurance Ombudsman in case the policyholder or claimant is not satisfied with the resolution provided by the insurer (iv) Contact details of office of Insurance Ombudsman:

Provided that the above details shall be mandatorily included in the communication to the policyholder or claimant in every case where the TPA has disallowed any part of the claim.’

Clause-6 of CG Guidelines.

‘Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

• appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

• appropriate internal controls to ensure that the risk management and compliance policies are observed;

appropriate internal controls to ensure that the risk management and compliance policies are observed;

The Authority observed that:

• The signatures of patient/attendant were not captured on summary bills and discharge summary of the hospitals on examination of the Claim documents in case of cashless settlement.

The signatures of patient/attendant were not captured on summary bills and discharge summary of the hospitals on examination of the Claim documents in case of cashless settlement.

• The Insurer reduced the claim amount by applying the deductions towards – (a) discount by hospital / network provider; and (b) difference in tariff.

The Insurer reduced the claim amount by applying the deductions towards – (a) discount by hospital / network provider; and (b) difference in tariff.

• Further, the hospital bills did not reflect, the discounts as deducted by the Insurer, in the final hospitalization bills rendering the policyholder or the claimant unaware of the actual bill raised by the hospital.

Further, the hospital bills did not reflect, the discounts as deducted by the Insurer, in the final hospitalization bills rendering the policyholder or the claimant unaware of the actual bill raised by the hospital.

• The settled amount was less than the final bill submitted by the hospital in respect of cashless claims.

The settled amount was less than the final bill submitted by the hospital in respect of cashless claims.

• The Insurer did not send letter/ communications addressed to the policyholder/claimant stating the details of paid claim amount against the claimed amount.

The Insurer did not send letter/ communications addressed to the policyholder/claimant stating the details of paid claim amount against the claimed amount.

The Authority raised the following issues and concerns:

• Patient/attendant signatures were obtained on discharge summaries and bills in only 31% of cashless claims.

Patient/attendant signatures were obtained on discharge summaries and bills in only 31% of cashless claims.

• Discounts negotiated with network hospitals were not reflected in final hospital bills, depriving policyholders of full benefit.

Discounts negotiated with network hospitals were not reflected in final hospital bills, depriving policyholders of full benefit.

• Claim settlement communications with granular details of deductions and reasons were not demonstrably sent to policyholders; only email logs were produced.

Claim settlement communications with granular details of deductions and reasons were not demonstrably sent to policyholders; only email logs were produced.

• 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.

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.

• Discounts were applied only to admissible claim amounts and not to the entire hospital bill, resulting in unfair treatment of policyholders.

Discounts were applied only to admissible claim amounts and not to the entire hospital bill, resulting in unfair treatment of policyholders.

• These lapses reflected serious deficiencies in transparency, fairness, and governance.

These lapses reflected serious deficiencies in transparency, fairness, and governance.

Penalty Rs. One Crore

The Authority imposed a penalty of INR 1 Crore under Section 102 of the Insurance Act, 1938, for the stated violations.

• Clause-2(v) of Schedule-C and Clause-3(vi) of Schedule-D under Annexure-22 2016 Circular read with 20(5) of TPA Health Regulations.

Clause-2(v) of Schedule-C and Clause-3(vi) of Schedule-D under Annexure-22 2016 Circular read with 20(5) of TPA Health Regulations.

• Regulation 20(9)(c) of the TPA Health Regulations.

Regulation 20(9)(c) of the TPA Health Regulations.

• Regulation 33(d)(ii) of IRDAI (Health Insurance) Regulations, 2016.

Regulation 33(d)(ii) of IRDAI (Health Insurance) Regulations, 2016.

• Regulation 21(3)(c)(i) of TPA Health Regulations.

Regulation 21(3)(c)(i) of TPA Health Regulations.

• Clause 6 of CG Guidelines.

Clause 6 of CG Guidelines.

Charge–4

(Inspection Observation E-18)

Violation of:

Para-12(ii) of Part IV and Para-1 of Part V of Schedule-B of IRDA (Preparation of Financial Statements and Auditor’s Report) Regulations, 2002 (“ 2002 Regulations ”)

Para 12(ii), Part IV, Schedule B of 2002 Regulations-

‘the management has adopted accounting policies and applied them consistently and made judgements and estimates that are reasonable and prudent so as to give a true and fair view of the state of affairs of the company at the end of the financial year and of the operating profit or loss and of the profit or loss of the company for the year.’

Para 1, Part V, Schedule B of 2002 Regulations-

‘An insurer shall prepare the Revenue Account, Profit and Loss Account [Shareholders’ Account] and the Balance Sheet in Form B-RA, Form B-PL, and Form B-BS, or as near thereto as the circumstances permit.’

Regulation 6 of IRDAI (Assets, Liabilities and Solvency Margin of General Insurance Business) Regulations, 2016 (“ Assets, Liabilities and Solvency Margin Regulations ”)

‘Every General insurer shall prepare a statement of solvency margin in FORM IRDAI-GI-SM in accordance with Schedule III.’

Clause-6 of the CG Guidelines-

‘Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

• appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

appropriate processes for ensuring compliance with the Board approved policy, and applicable laws and regulations;

• appropriate internal controls to ensure that the risk management and compliance policies are observed;

appropriate internal controls to ensure that the risk management and compliance policies are observed;

• an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

The Authority observed that:

• Upon examination of reinsurance agreement of the Insurer with GIC Re in respect of ‘retail health quota share treaty’ (treaty), the rate was mentioned as ‘original net risk rates (net of commissions and expenses).

Upon examination of reinsurance agreement of the Insurer with GIC Re in respect of ‘retail health quota share treaty’ (treaty), the rate was mentioned as ‘original net risk rates (net of commissions and expenses).

• 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.

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.

• 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.

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.

• 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’.

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’.

The Authority raised the following issues and concerns:

• The insurer incorrectly treated the difference between gross and net rates as reinsurance commission, without providing a clear explanation or justification for this calculation which resulted in overstatement of profits and solvency margins in the initial years.

The insurer incorrectly treated the difference between gross and net rates as reinsurance commission, without providing a clear explanation or justification for this calculation which resulted in overstatement of profits and solvency margins in the initial years.

• 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 overstatement of ceded premiums and miscalculation of commissions have most likely distorted key financial ratios and might have understated liabilities, thereby impacting solvency ratios.

• Inconsistencies were noted in accounting of premium and tax payments, impacting financial transparency and solvency assessment.

Inconsistencies were noted in accounting of premium and tax payments, impacting financial transparency and solvency assessment.

• The practices reflected weak internal controls and deficiencies in corporate governance.

The practices reflected weak internal controls and deficiencies in corporate governance.

Warning

The Authority warned the insurer for the violations of:

a) Para-12(ii) of Part IV and Para-1 of Part V of Schedule-B of 2002 Regulations.

b) Regulation 6 of Assets, Liabilities and Solvency Margin Regulations

Further, any recurrence in future shall attract stringent regulatory action.

Charge–5

(Inspection Observation G-38)

Violation of:

Regulation 8(1) of PPHI Regulations

a proposal for grant of insurance cover, either for life insurance business or for general insurance business or for health insurance business, must be evidenced by a document in written or electronic or any other format as approved by the Authority. It is the duty of the insurer to furnish to the insured, free of charge, within 30 days of the acceptance of a proposal, a copy of the proposal submitted by the Insured.’

Clause-2(1)(f) of IRDAI Master Circular on Unclaimed Amounts of Policyholders dated July 25, 2017. (“ Unclaimed Amounts Master Circular ”)

‘Unclaimed Amounts shall include any amount held by insurers but payable to policyholders or beneficiaries, including interest accrued thereon, remaining unclaimed beyond six months from the due date or settlement date of such amount, whichever is earlier.’

Clause-4(b) & 5 of IRDAI Circular dated September 19, 2018.

Clause 4(b)-

‘Provide data as sought by the onsite inspection team during the onsite inspections, within the timelines specified by the team.’

Clause 5-

‘Any data that is not submitted in accordance with para 4 above shall be treated as non-submissions for the purpose of conducting onsite inspections under Section 14 (2) (h) of the IRDA Act 1999.’

Clause-6 of CG Guidelines

‘Given the risks that an insurer takes in carrying out its operations, and the potential impact it has on its business, it is important that the Board lays down the policy framework to put in place:

• robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

robust and efficient mechanisms for the identification, assessment, quantification, control, mitigation and monitoring of the risks;

• appropriate internal controls to ensure that the risk management and compliance policies are observed;

appropriate internal controls to ensure that the risk management and compliance policies are observed;

• an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

an internal audit function capable of reviewing and assessing the adequacy and effectiveness of, and the insurer’s adherence to its internal controls as well as reporting on its strategies, policies and procedures; and

The Authority observed that:

• Unidentified proposal deposits amounting to ₹1.06 crore were retained beyond six months without transfer to the unclaimed amount account as of March 31, 2021.

Unidentified proposal deposits amounting to ₹1.06 crore were retained beyond six months without transfer to the unclaimed amount account as of March 31, 2021.

• Proposal deposits were received without obtaining proposal forms.

Proposal deposits were received without obtaining proposal forms.

The Authority raised the following issues and concerns:

• The interpretation of the Insurer that “any premium received in advance, deposits, or unallocated premium during the currency of the policy shall not be considered as ‘unclaimed amount’” is fundamentally flawed and demonstrates a disregard for regulatory guidelines and policyholder interests.

The interpretation of the Insurer that “any premium received in advance, deposits, or unallocated premium during the currency of the policy shall not be considered as ‘unclaimed amount’” is fundamentally flawed and demonstrates a disregard for regulatory guidelines and policyholder interests.

• Retention of such funds reflected unethical practices and weak governance, adversely impacting policyholder interests.

Retention of such funds reflected unethical practices and weak governance, adversely impacting policyholder interests.

• It is entirely inappropriate and unethical for the insurer to retain such funds indefinitely which not only undermine trust but also raise significant concerns about the governance and compliance culture of the Insurer.

It is entirely inappropriate and unethical for the insurer to retain such funds indefinitely which not only undermine trust but also raise significant concerns about the governance and compliance culture of the Insurer.

Advisory

The Authority advised the Insurer to strengthen internal controls and strictly adhere to all extant regulations:

• a) Regulations-8(1) of PPHI Regulations.

a) Regulations-8(1) of PPHI Regulations.

• b) Clause-2(1)(f) of Unclaimed Amounts Master Circular.

b) Clause-2(1)(f) of Unclaimed Amounts Master Circular.

• c) Clause-4(b) & 5 of IRDAI Circular.

c) Clause-4(b) & 5 of IRDAI Circular.

• d) Clause-6 of CG Guidelines

d) Clause-6 of CG Guidelines

Further, any similar lapse in future shall be viewed sternly.

The Authority has directed the Insurer to remit the penalty amount by debiting the shareholders’ account within a period of 45 days from the date of the Order.

The Authority has also directed the Insurer to:

1) Place the Order before the Board of Insurer in the upcoming Board Meeting and the Insurer shall provide a copy of the minutes of the discussion.

2) Submit an Action Taken Report to the Authority as per the direction given within 90 days from the date of Order.

The Insurer if aggrieved by the Order may prefer an appeal to the Securities Appellate Tribunal as per Section 110 of the Insurance Act, 1938.

A copy of the Order is attached herewith for your ready reference.

Source category: IRDAI

Attachments

• IRDAI Order in the matter of Care Health Insurance