Page 31 - Insurance Times January 2023

Customer (KYC) documents as a part of each claim file. Further,
as per IRDAI circular (February 2013) on Anti-Money
Laundering/ Counter Financing of Terrorism, General
insurance companies were required to carry out KYC norms
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

11. Non-deduction of TDS on claim payments
made to hospitals
The insurance companies while releasing/ making payment
to hospitals for settlement of medical/ insurance claims are
liable to deduct tax at source under section 194J36 of Income
Tax Act. During data analysis in UIICL, Audit observed that in
42,847 claims out of 65,46,129 claims, TDS amounting to Rs.
14.01 crore was not deducted from payments made to
hospitals. UIICL replied (July/ October 2021) that they had
identified the problem and corrected the system and correct
TDS is being deducted now. Moreover, the Company started
filing revised TDS returns with Tax Authorities for previous
years also, wherever anomaly was noticed.
Audit also observed that in 65 claims (for Rs. 66 lakh) of OICL
12. Non-reflection of discount in hospital bills
(out of 559 claims), the ID cards issued by TPA did not have
Regulation 20(9) of the IRDAI photos of policyholder/ beneficiary, which was one of the KYC
TPA - Health Services Regulations 2016 and IRDAI circular documents. NIACL replied (October 2021) that it has
dated 23 June 2015 provided that final bills of the network instructed all their TPAs to verify the KYC norms at the time
provider need to reflect discount amount. The format of of claims and keep the relevant papers in the claim file. UIICL
provider bill as prescribed in Schedule D of dated 28 March replied (July/ October 2021) that they have initiated the
2016 has a mandatory column for depicting the discount. exercise to obtain KYC details in all the above cases and put in
However, test check of 2,934 claims by Audit revealed that in place systems to ensure that no claim, where KYC is
774 claims out of 2,934 claims paid by the four PSU insurers compulsory, is paid unless KYC documents are obtained and
(NIACL: 55, UIICL: 287, OICL: 404 and NICL: 28) discount uploaded.
percentage and amount was not mentioned in the hospital
bills NIACL replied (January 2021) that since the change is 14. Absence of Authorization
required at the hospital end, they are verifying the relevant
Letter for cashless facility Authorization letters are issued
cases and stated that they cannot insist, since hospitals have
upon receipt of Request for Pre-Authorization and TPA
their own practice. NIACL further stated (October 2021) that
examines the same and accords approval in accordance with
the TPAs have been advised to work out the issue with hospital
the Pre-Authorization procedure mentioned in the SLA. The
to mandatorily reflect the discount amount agreed and TPAs definition for cashless facility as provided in para 2(f) of IRDAI
need to state discount rate agreed vis-à-vis actual discount
(Health Insurance) Regulations, 2016 stipulates that cashless
given by the hospital in the claim settlement letter.
claim can be settled directly by the insurer to the network
provider to the extent pre-authorization is approved. In 81
13. Non-verification of KYC claims (39 claims of NIACL for Rs. 1.26 crore and 42 claims of
As per SLA all claim files should, inter alia include Know Your UIICL for Rs. . 0.26 crore) out of 737 selected cashless claims

The Insurance Times January 2023 27