IRDAI penalises Care Health Insurance Rs 1 crore for claims lapses

What the Record Shows

The Insurance Regulatory and Development Authority of India (IRDAI) imposed a penalty of Rs 1 crore on Care Health Insurance Limited by a final order dated 15 December 2025, referenced IRDAI/E&C/ORD/MISC/138/12/2025. The order, signed by two whole-time members of the Authority, Deepak Sood, Member (Non-Life), and P. K. Arora, Member (Actuary), followed a remote inspection of the insurer conducted between 30 August and 9 September 2021. This is a regulatory order on claim-processing and governance lapses; it is separate from, and unrelated to, the earlier IRDAI order on employee stock options against the same insurer, which is stayed and under appeal.

Per the order, the Authority examined five charges. It levied the monetary penalty of Rs 1 crore on a single charge concerning health claims handling, and disposed of the remaining four charges through warnings and advisories. The penalty was passed under Section 102 of the Insurance Act, 1938, for breaches of the IRDAI (Third Party Administrators - Health Services) Regulations, 2016, the IRDAI (Health Insurance) Regulations, 2016, a 2016 circular on TPA documentation, and Clause 6 of the Authority's Guidelines on Corporate Governance for insurers.

The process leading to the order is set out in it: a show-cause notice referenced IRDA/E&C/2022-23/704/SCN/LR/072, the insurer's written responses, a personal hearing held on 18 June 2025, and further submissions by email dated 30 June 2025 before the order was passed. The insurer's responses to each charge are recorded in the order, and on several points the Authority took note of remedial steps the company said it had taken.

How It Worked

The charge that drew the penalty concerned the documentation and transparency of health claims. Per the order, IRDAI found that the insurer had obtained the signatures of the patient or attendant on summary bills and discharge summaries in only 31 per cent of the claims sampled, meaning that in 69 per cent of cases the required signatures were not captured. The Authority treated this as a breach of the TPA and health-insurance documentation requirements read with the corporate-governance guidelines.

The same charge covered the treatment of hospital discounts. Per the order, the Authority observed that discounts offered by network hospitals were not reflected in the final bills in a way that passed their benefit to policyholders, and it recorded a concern that customers were "being unjustly deprived of the full benefit of discounts". IRDAI also found that settlement communication to policyholders, setting out amounts paid, amounts disallowed and the reasons, was deficient; the insurer's account of how it communicated deductions was, per the order, inconsistent between its written submissions and its statements at the hearing.

The four charges disposed of without a penalty covered distinct areas. On grievance and settlement communication, the Authority warned the insurer for relying solely on a hyperlink to convey information that should have been clear and unambiguous. On information and cyber security, it issued a warning and advisory and directed the insurer to place the status before the board's Risk Management Committee and file an action-taken report within 90 days. On reinsurance accounting, the order recorded that a net-rate quota-share treaty with GIC Re had been "grossed up" in the books, which the Authority found overstated profit and solvency for the year; the insurer said it had discontinued such net-rate treaties from FY 2023-24, and the charge ended in a warning. On unallocated premium, the Authority found that unidentified proposal deposits of about Rs 1.06 crore had been held for more than six months without being transferred to the unclaimed-amounts account as of 31 March 2021; the insurer said it had since moved Rs 20 lakh of that to unclaimed amounts, and the charge closed with an advisory.

Who Lost Money

No collapsed scheme or diverted deposit is involved. The harm the order describes is to policyholders' interests in the ordinary course of health cover: claim files processed on deficient documentation, hospital discounts that did not visibly reach the insured, and settlement letters that did not clearly explain what was paid and what was cut. The order does not quantify a rupee loss to any named policyholder, and none should be inferred from the penalty.

The clearest identified sum owed back to customers is the unallocated-premium finding. Per the order, about Rs 1.06 crore of unidentified proposal deposits sat unresolved beyond the permitted period, of which the insurer reported Rs 20 lakh outstanding and transferred to the unclaimed-amounts pool by 30 June 2025. Money in that pool is meant to be traceable and returnable to the policyholders it belongs to.

The Rs 1 crore penalty itself is payable to the government by debiting the insurer's shareholders' account, not policyholder funds. It is a sanction on the company, not a restitution to claimants.

Where It Stands Now

The order is final at the regulator's level, not interim, and carries concrete directions. Care Health Insurance was directed to remit the Rs 1 crore penalty by debiting its shareholders' account within 45 days of receipt, to place the order before its board at the next meeting and supply the minutes, and to submit an action-taken report to the Authority within 90 days. The cyber-security charge separately requires a status report to the board's Risk Management Committee within 90 days.

The order records a right of appeal: an insurer aggrieved by it may prefer an appeal to the Securities Appellate Tribunal under Section 110 of the Insurance Act, 1938. As of the date this report was reviewed, no public record of an appeal against, or a stay of, the 15 December 2025 order could be located on the tribunal's or the regulator's listings; the position may change if an appeal is filed within the statutory window. This order should not be confused with the insurer's separate ESOP matter, which is a different order and is stayed pending its own appeal.

What It Means

For policyholders, the order is a window into the operational detail that decides whether a health claim is handled fairly: whether the paperwork is complete, whether a hospital discount actually reduces what the customer pays, and whether the settlement letter explains the maths. Regulation ties these back to the third-party-administrator and health-insurance rules precisely because they are where day-to-day claims experience is made or lost.

The practical takeaway is about documentation on the customer's side too. When a claim is settled, a policyholder is entitled to a settlement communication showing the amount claimed, the amount paid, any deductions and the reasons; keeping that letter, and checking that any hospital discount has been applied to the amount you bear, is the simplest safeguard. Registration and grievance status for any insurer can be verified through IRDAI's public registers and the Bima Bharosa portal.

This matter sits alongside other recent regulatory actions on insurer conduct, including the separate IRDAI ESOP order against Care Health Insurance now stayed at SAT and the IRDAI penalty on Policybazaar over product ranking and premium remittance. The full set of these matters is tracked in the Oquilia enforcement archive.

FAQ

What exactly did IRDAI order?

IRDAI imposed a Rs 1 crore penalty on Care Health Insurance by order dated 15 December 2025 for lapses in health-claims handling, and issued warnings and advisories on four further charges covering grievance communication, cyber security, reinsurance accounting and unallocated premium. The insurer was directed to pay within 45 days and report to its board.

Does this order mean Care Health Insurance committed claim fraud?

No. The order records regulatory breaches in claim-processing documentation, transparency of hospital discounts and settlement communication, and imposes a penalty under Section 102 of the Insurance Act, 1938. It is a compliance order, not a finding of fraud, and the insurer retains a statutory right of appeal against it.

What was the finding on missing signatures?

Per the order, the insurer captured the patient's or attendant's signature on summary bills and discharge summaries in only 31 per cent of the sampled claims, so 69 per cent lacked the required signatures. IRDAI treated this as a breach of the third-party-administrator and health-insurance documentation requirements read with the corporate-governance guidelines.

Is this the same as the ESOP order against Care Health Insurance?

No. This 15 December 2025 order concerns claim-processing and governance lapses and is a distinct matter. The ESOP order is a separate IRDAI order from July 2024 that was stayed by the Securities Appellate Tribunal and remains under appeal. The two should not be conflated.

Where can I read the official order?

The full order is published on the IRDAI website under its Warnings and Penalties section, referenced IRDAI/E&C/ORD/MISC/138/12/2025 and dated 15 December 2025.

This report is based on the IRDAI order dated 15 December 2025 in the matter of Care Health Insurance Ltd and was reviewed against the regulator's published record on 30 July 2026.