August 20, 2010

IRDA: Will follow HC direction on cashless facility

Insurance regulator IRDA today said it will follow the Delhi High Court’ direction to take steps on resuming cashless facility to policyholders provided by four PSU general insurers.
“Now that HC has given direction, we will follow that,” IRDA Chairman J. Hari Narayan told reporters on the sidelines of a FICCI event here.

On Tuesday, the Delhi High Court had asked IRDA to make some arrangement to provide cashless facilities to policyholders, amid the suspension of cashless treatment facility at several big hospitals by four public sector general insurers - New India Assurance, United India Insurance, National Insurance and Oriental Insurance.

“The Insurance Regulatory and Development Authority (IRDA) should, as a regulator of the insurance industry, intervene and ensure that such changes do not affect existing policyholders ...,” High Court Justice S. Muralidhar had ruled.

Mr. Hari Narayan said the regulator comes into picture, if there was breach of contract between the company and the insured person. “It becomes a regulatory issue if there is a violation in terms of policy,” he said.

The PSU insurers have stopped the cashless service from July 1 because of alleged over-billing by some private hospitals.

At a meeting of private hospitals and public sector insurance companies last month, both the parties had agreed to restore the cashless treatment facility under the mediclaim policy within a maximum of 30 days.

The hospitals have already restored the cashless facility for emergency, ICU, cardiac care and trauma cases.

When asked if the premiums would increase post the settlement of cashless mediclaim issue, he said, “I think it would help bring in more products with differential features in the market.”

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