According to The Comptroller and Auditor General of India (CAG) report, PSU insurers’ market share in the health insurance business is declining continuously. All four public sector insurance companies incurred losses of Rs 26,364 crore in the health insurance portfolio for the last five years. This was due to higher claims in group policies.

The aggregate loss of the four PSU insurance companies – United India Insurance Company Limited (UIICL), New India Assurance Company Limited (NIACL), Oriental Insurance Company Limited (OICL) and National Insurance Company Limited (NICL) stood at Rs 26,364 crore during 2016-17 to 2020-21.

With a gross direct premium of Rs 1,16,551 crore (between 2016-17 to 2020-21), the health insurance business is the second largest category of business of the PSU insurers, the first being motor insurance.

CAG report said that the finance ministry laid down guidelines for underwriting group policies according to which the combined ratio of standalone group policies shall not exceed 95%. The combined ratio shall not exceed 100% for group policies involving cross-subsidy.

The audit found that the PSU insurers didn’t comply with the ministry guidelines, and the combined ratio of group health insurance segment reported by PSU insurers ranged between 125–165%. With respect to claim management, the report said that the IT systems in PSU insurers lacked appropriate validation checks and controls, thereby undermining the smooth functioning and reporting system.

Consequently, this has led to lapses like multiple settlements of claims, non-payment of interest on delayed settlement, excess payment over and above the sum insured, irregular payments on implants, non-application of co-payment clause, excess payments due to ignoring the waiting period clause for specific diseases, breaching of capping limit for specific diseases, incorrect assessment of admissible claim amount, etc.