Multiple settlements for single claim, claims paid in excess of sum insured among reasons for losses
General insurance companies in India have incurred losses of Rs 26,364 crore on their health portfolios during 2016-2021, according to a new report by the Comptroller Auditor General (CAG). The report was based on analysis of 32 general insurance companies.
Irregularities such as multiple settlements for single claim, claims paid in excess of sum insured, claims paid in fresh policies by ignoring waiting period, excess payment due to non-recovery of co-payment, breach of capping on specific diseases and non-adherence to network agreed rates were some of the reasons cited by the central auditor.
CAG studied four public sector general insurers, The New India Assurance Company Limited (NIACL), The Oriental Insurance Company Limited (OICL), National Insurance Company Limited (NICL) and United India Insurance Company Limited (UIICL).
There are seven stand-alone health insurance (SAHI) companies. The remaining 21 are private insurers.
The losses of the sector were attributed to decreased profits of PSU insurers and overall losses.
The market share of PSU insurers fell steadily to 49 per cent in 2020 from 63 per cent in 2016, according to the report. The share of SAHI and private insurers, on the other hand, increased to 27 per cent from 18 per cent and to 24 per cent from 19 per cent, respectively, during the same period.
NIACL and UIICL settled more than one claim on different dates with the same policy number, beneficiary name, illness code, insured name, hospital name, hospitalisation names and disease, the data showed.
The companies stated technical issues for the duplicate payments and NIACL claimed that Rs 0.74 crore has been recovered.
NIACL settled 792 cases amounting to Rs 4.93 crore, while UIICL settled 12,532 amounting to Rs 8.6 crore.
Losses made because of claims paid in excess of sum insured was Rs 33 lakh for NIACL and Rs 36.13 crore for UIICL for payments for claims made in terms of cumulative bonus and group or corporate policies.
Health insurance policy terms and conditions often mention that the policy will not cover some diseases like cataract, hypertension, hernia, fistula, hydrocele and others for two-four years and the waiting period is later deleted after a stipulated time.
NIACL made an avoidable payment of Rs 3.31 crore for 195 claims related to freshly issued policies, the analysis revealed. In one of the cases examined, an amount of Rs 8 lakh was issued within 30 days from the commencement of policy.
Excess payments were also made in co-payment policies, according to the report. Co-payment provision involves sharing of a specific percentage of claims while the remaining is borne by the health insurance company. An analysis of 275 claims showed that co-payment was not sought, resulting in excess payment of Rs 84.36 lakh.
The report highlighted another sinkhole: Breaching of rates and claim amounts mentioned in the policy for specific diseases and procedures.
The capping amount for 1,389 retail clams for cataract were not capped and an excess payment of Rs 2.33 crore was made as a result, CAG found. The capping range was fixed for 13 of 19 products of NIACL, offering a limit between Rs 10,000 and Rs 50,000.
Also, the audit also found excess room charges allowed in claim settlement, non-deduction of claim payment for deficiencies in the requirement such as submission of bills, prescriptions and other calculation errors, irregular payments on implants running into lakhs and delayed claim payments.
The audit concluded that processing the health insurance claims mainly depends on digital platform and IT systems with embedded validation controls, seamless flow of data and data integration.
The IT systems in PSU insurers, however, have shortcomings of smooth functioning and do not capture all data and required fields, resulting in lapses, according to CAG.
The auditor urged companies to strengthen their systems and the latter have agreed to comply with the same.
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