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The health insurance space may have gained a lot of traction due to COVID-19 over the last year-and-a-half, but remains a minefield of complex clauses for many policyholders. The recently-released Council of Insurance Ombudsmen’s annual report 2020-21 has brought to light several reasons for policyholder dissatisfaction and complaints, as also corrective actions that insurers need to take.
Complicated clauses leading to disputes
Though simplifying insurance documents’ policy wordings has been on the Insurance Regulatory and Development Authority of India’s (IRDAI) agenda for a long time now, the policies continue to be riddled with complex clauses. The ombudsman’s report lists proportionate deduction, sum insured enhancement, active line of treatment and customary and reasonable charges among clauses that require a re-look or proper interpretation.
These clauses lead to a lot of heartburn as they often lead to only partial claim settlements. For instance, in the case of proportionate deduction, the overall charges are linked to room rates. So, if you choose an expensive room category, all other expenses – doctors’ visit, operation theatre charges and so on – go up proportionately. If you are not eligible for such a room due to sub-limits in your policy, your entire claim amount will get reduced accordingly. This is a clause that many policyholders often do not understand, resulting in disputes.
Claim rejection due to delayed intimation
The IRDAI has asked insurers to not deny claims only on the grounds of delay in intimation. That the timeframe prescribed for document submission should not impede settlement of genuine claims is the IRDAI’s stand. Yet, the insurance ombudsman report highlighted this hassle and advised insurers to strictly adhere to the guideline. It also recommended clear guidelines and diligent implementation of this guideline by insurers.
Change in policy terms at renewal
Moneycontrol has earlier covered the predicament of policyholders who suddenly get renewal notices that come with significant changes in the clauses and features. In fact, their policies are withdrawn and they are simply presented with new products. Senior citizens, in particular, often have no choice but to accept the terms and conditions as moving to another insurer is difficult given their age and co-morbidities. While the ombudsman report does not have a remedy for this challenge, it has recommended that substantive changes be highlighted in the renewal notices and also on the first page of the policy schedule.
Leaving decision-making to TPAs
IRDAI’s health insurance regulations 2016 make it clear that it’s the insurer, and not the third-party administrator, that should be the final decision-making authority. Yet, the insurance ombudsmen offices have pointed out that most general insurers do not have any established system for review of claims rejected by TPAs. “Even when the complainant approaches the (insurance company’s) grievance cell after claim repudiation by the TPA, the insurer seldom examines the claim dispassionately. In some cases, the insurer depends on the TPA to present cases before the ombudsman,” the report notes.
Poor grievance redressal mechanism
Another service deficiency flagged by the insurance ombudsman report, this one relates to lack of customised responses to policyholders’ grievances. The same stereotyped letters are sent by all departments concerned, “without properly addressing the grievances raised by the customers/complainants,” the report points out. “Insurers are becoming more cautious about their business ranking in the market and least bothered about their ranking in (terms of) number of complaints registered against them,” the report says, in a strongly-worded statement.