IRDAI has imposed Rs. 5 lakh penalty on Reliance General Insurance for violating various norms, including indirect claim settlement.
The insurance regulator found that the company had settled health insurance claims through Third Party Administrators (TPAs) instead of paying claim amount directly to the policyholders. TPAs are not allowed to settle claims on behalf of insurers.
Insurance companies have been mandated to settle claims directly through cheque, demand draft or online payment to the policyholders.
“From the submissions made by the insurer it is evident that the amount against the claims to be paid to the policyholders is still routed through the TPAs. The insurers can directly transfer funds through electronic means to the policyholders. The intent or the purpose of routing claim amounts through TPAs has not been made clear. This is a clear violation of the regulation,” stated IRDAI circular.
The insurance regulator has asked Reliance General to pay the fine within 15 days.