Page 49 - Insurance Times September 2023

at the settlement stage where claim payout/ premium refund crosses a threshold of Rs. 1 lakh per claim/ premium refund.
Audit observed that in 907 claims settled (Rs. 6.06 crore) out of 2,934 claims test checked, KYC documents were not available
in the claim files, as per summary given below in the table:
Non-verification of KYC documents

Insurer No. of claims No. of claims where No. of claims above Claim amount paid
provided by auditee KYC not verified or 1 lakh where KYC not where KYC not verified
organization not on record, verified/not on or not on record
and audited as per SLA record (Rs. in lakh)
NIACL 1,154 473 57 3.11
UIICL 1,022 309 22 1.48
OICL 559 74 17 0.93
NICL 199 51 10 0.54
Total 2,934 907 106 6.06

Audit also observed that in 65 claims (for Rs. 66 lakh) of OICL increased the overall losses. The losses were on account of
(out of 559 claims), the ID cards issued by TPA did not have group health insurance policies where premium charged was
photos of policyholder/ beneficiary, which was one of the KYC less and claim outgo was more in comparison to retail policies.
documents. NIACL replied (October 2021) that it has The Combined Ratio for group health insurance segment of
instructed all their TPAs to verify the KYC norms at the time PSU insurers ranged from 125-165 per cent, which was much
of claims and keep the relevant papers in the claim file. UIICL higher than the ceiling of 100 per cent prescribed by the
replied (July/ October 2021) that they have initiated the Ministry of Finance. The PSU insurers carried out
exercise to obtain KYC details in all the above cases and put in empanelment of TPAs but allocated business to non-
place systems to ensure that no claim, where KYC is empanelled TPAs also. PSU insurers incorporated their own
compulsory, is paid unless KYC documents are obtained and TPA (Health Insurance TPA-HITPA) but the allocation of
uploaded. business to HITPA by them was minimal.

14. Absence of Authorization PSU insurers took the initiative to have their own network of
Letter for cashless facility Authorization letters are issued hospitals by forming Preferred Provider Network (PPN) but
upon receipt of Request for Pre-Authorization and TPA even after 10 years, enrolment of hospitals under PPN
examines the same and accords approval in accordance with coverage was inadequate. The IT systems lacked appropriate
the Pre-Authorization procedure mentioned in the SLA. The validation checks and controls which has resulted in lapses
definition for cashless facility as provided in para 2(f) of IRDAI such as multiple settlement of claims, excess payment over
(Health Insurance) Regulations, 2016 stipulates that cashless and above the sum insured, excess payments due to ignoring
claim can be settled directly by the insurer to the network waiting period clause for specific diseases, non-application of
provider to the extent pre-authorization is approved. In 81 co-payment clause, breaching of capping limit for specific
claims (39 claims of NIACL for Rs. 1.26 crore and 42 claims of diseases, incorrect assessment of admissible claim amount,
UIICL for Rs. 0.26 crore) out of 737 selected cashless claims irregular payments on implants, non-payment of interest on
test checked in NIACL and UIICL, Authorization Letter was delayed settlement etc. Implementation of underwriting
not available in the claim files. However, cashless claim policy through test check of 188 group insurance policies
payments were recommended and settlement done. NIACL revealed non-adherence to outgo calculator and non-loading
replied (January/October 2021) that they will take up with for adverse claim experience resulting in undercharging of
the TPA during review and shall initiate appropriate action, if premium of Rs.1,548.19 crore in 155 policies and excess
found deficient and added that it advised TPAs to strictly follow discount of Rs.9.28 crore in 3 policies.
the provisions of SLA and ensure that all authorization letters
are put in the claim file. PSU insurers incorporated their own TPA (Health Insurance
TPA or HITPA) but the allocation of business to HITPA by them
The losses of health insurance business of PSU insurers either was minimal. The four PSU insurers have preferred provider
wiped out/decreased the profits of other lines of business or network (PPN) agreements with only 2,552 hospitals, much

44 September 2023 The Insurance Times