The Insurance Regulatory & Development Authority (Irda) is looking at data on claims filed

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by hospitals before intervening in the dispute between them and the four public sector general insurance companies. Irda wants to see if there have been fraudulent claims.

As reported first by Financial Chronicle on July 5, the four insurers stopped cashless services in certain hospitals that they said had been involved in fraudulent claims.

“The Irda chairman, J Hari Narayan, will meet third party administrators to discuss various issues of service tax and mounting health claims,” a senior official in the regulator’s office said.

According to the official, the chairman is analysing the claims experience of the insurers in relation to these hospitals.

“The decision of the insurers to discontinue cashless services is a business decision and Irda will not intervene unless the situation so warrants,” he said.

The four insurers stopped the cashless service in a large proportion of their empanelled hospitals with effect from July 1. The health insurance business has turned unviable for insurance companies both in the public and private sectors, as the claims ratio has been very high.For every Rs 100 that an insurance company earns as premium for a health policy, Rs 130 goes as claims payout.

S L Mohan, general secretary of the General Insurance Council, a body of all general insurance companies, said, “The claims ratio for group health insurance is higher than in the case of individual health policies.”

The average claim for the industry is as high as 130 per cent, he added.

According to the Irda official quoted earlier, the biggest concern to the insurers, the regulator and the government is how to make the health insurance business viable. With new players entering the market, the competition is driving prices down.

One fallout of high claims is that premiums go up as insurers pass on the cost to policyholders.

However, the withdrawal of cashless facilities does not mean the insurers are not settling claims filed by individual policyholders. Only, they have to spend their own money for treatment and then file reimbursement claims.

Before July 1, hospitals would treat without payments from patients and then themselves file claims. Since that date, this facility is not available at hospitals that have been struck off their panels.