Context:
The Insurance Regulatory and Development Authority of India (IRDAI) has warned Heritage TPA for unilaterally closing health claims and communicating claim denials directly to policyholders a violation of regulatory norms.
What is Breach of Claim Norms?
A breach of claim norms by an insurer or broker, according to IRDAI, can include exceeding claim consultancy limits, expressing fees as a percentage of the claim, or failing to adhere to regulatory guidelines for claim settlement. Insurer negligence in claim settlement timelines, or failing to adequately explain deductions from claim amounts, also constitute breaches, as outlined in IRDAI regulations.
What the Regulator Said:
- Only insurers are authorized to communicate claim decisions (approvals or rejections).
- TPAs must not influence claim outcomes or send repudiation letters to customers.
- Heritage TPA was found to have closed claims without forwarding query letters from insurers or sending reminder letters to policyholders.
Regulatory Requirement:
- As per IRDAI norms, TPAs must:
- Issue deficiency letters if documentation is incomplete.
- Send up to three reminders (each seven days apart) if documents are not submitted.
- Heritage TPA failed to comply with this process, according to a remote inspection conducted by IRDAI in November 2021.
Implication
- The warning reinforces that claim settlement communication is solely the insurer’s responsibility.
- TPAs acting beyond their mandate can face regulatory consequences.
