By IndiaHub 
In a detailed order passed on December 15, 2025, IRDAI also issued multiple warnings and advisories to the Care Health Insurance company after a remote inspection that revealed widespread lapses across grievance redressal, cybersecurity, reinsurance accounting as well as handling of unclaimed amounts.
Read on to know what the charges were, how Care Health defended itself, and what IRDAI finally ordered.
Also read: First-time health insurance buyer? 7 smart tips to choose the right policy and avoid costly regrets
What were the charges issued against Care Health Insurance Ltd.?
Charge 1: Grievance redressal failure
IRDAI observed that when grievances were not resolved in favour of policyholders, Care Health failed to inform complainants about their right to approach the Insurance Ombudsman, along with the name and address of the ombudsman of competent jurisdiction.
Instead, grievance closure and claim repudiation letters only included customer care contact details, email ID, and vague hyperlink. The regulator pointed out that this approach placed an undue burden on policyholders and denied them clear access to grievance redressal mechanisms.
Charge 2: Cybersecurity lapses
During the inspection, IRDAI found that Care Health Insurance did not fix serious cybersecurity weaknesses within the time limits prescribed by the regulator.
Charge 3: Claims settlement and transparency violations
IRDAI found multiple lapses in cashless claims processing, including:
- Patient or attendant signatures were missing on discharge summaries and summary bills of the hospitals
- The insurer reduced the claim amount by applying the deductions towards – (a) discount by hospital/network provider; and (b) difference in tariff.
- Hospital discounts applied by the insurer were not reflected in the final hospital bills
- Policyholders were unaware of the actual bill raised by hospitals
- While examining the claims documents, it was observed that the settled amount was less than the final bill submitted by the hospital in respect of cashless claims.
- Claim settlements were communicated to hospitals but not properly communicated to policyholders
- Detailed settlement letters explaining deductions, disallowed amounts and reasons were not sent to policyholders
The insurer admitted that signatures were obtained in only 31% of cases, meaning 69% of claims failed to meet mandatory documentation requirements.
IRDAI held that submitting email logs did not constitute credible proof of communication and that such practices reflected a serious disregard for transparency and policyholder rights.
Charge 4: Reinsurance accounting irregularities
The insurance watchdog also found that Care Health Insurance recorded its reinsurance transactions in a way that made its profits and financial strength look better than they actually were.
Charge 5: Handling of unidentified proposal deposits
The inspection revealed that Rs 1.06 crore received as proposal deposits was parked in the unallocated premium account for over six months without being transferred to the unclaimed amounts account.
IRDAI held that retaining such funds indefinitely was unethical and contrary to policyholder protection norms.
Also read: Have unclaimed insurance amount? Here’s how to check and claim your hidden wealth
What did the insurer submit in response?
In response to the charges, the insurer argued that:
For grievance redressal, the company shared the Insurance Ombudsman details as a hyperlink because the information was variable in nature. The insurer submitted an undertaking that the process has been modified to include specific insurance ombudsman details in all grievance resolution letters as well as claim rejection letters issued by the authority.
For cybersecurity, delays occurred due to system complexity.
For claims settlement, the insurer claimed that customers were copied on all communications between the Company and the hospital, discounts were passed on, and system digitisation was underway.
Additionally, they said that despite multiple reminders, some network hospitals have shown their inability to reflect discounts on their bills as they work on different tariffs for different insurers/ entities as well as cash customers and it 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. Care Health said they were working with hospitals to address this issue.
The insurer also said that for cashless claims, it sends a detailed pre-authorisation approval letter to the hospital, outlining deductions, tariffs and applicable discounts, since the payment is made directly to the hospital.
For reinsurance irregularities, the insurer said that the company has discontinued the net rate treaties with GIC Re with effect from FY 2023-24. The insurer also submitted that it currently does not have any net rate treaties with any reinsurer.
For proposal deposits, the insurer maintained that unallocated premiums during policy currency were not “unclaimed”, and that Rs. 1.06 crores received from the proposer does not qualify to be unclaimed amount of the policyholder.
What was the IRDAI judgment on all the charges?
In its order, IRDAI imposed a Rs 1 crore penalty for Charge 3, exercising its powers under Section 102 of the Insurance Act, 1938, citing serious lapses in claims settlement and transparency.
For the remaining charges, the regulator issued warnings and advisories, while cautioning that any similar lapses in the future would be viewed seriously and could invite stringent regulatory action.
What does the order mean for policyholders?
The order makes it clear that claims transparency and timely communication with policyholders are non-negotiable, and that corrective steps taken later cannot undo violations that have already affected policyholder rights.
IRDAI has directed Care Health Insurance to pay the Rs 1 crore penalty from its shareholders’ account within 45 days of receiving the order. The insurer must also place the order before its Board of Directors and submit an action-taken report within 90 days.