Health insurance claim denied? Approach insurance ombudsman for redressal

Escalate unfair claim repudiation, other grievances to ombudsman offices, consumer courts

With the Insurance Regulatory and Development Authority of India (IRDAI) reportedly flagging lapses in private standalone insurer Star Health’s claim settlement processes, the focus is once again on claim-related grievances in the health insurance space.

According to a CNBC-TV18 report, the regulator conducted inspections across 8-10 general and health insurance companies, and is expected to take further action after concluding its investigation. On its part, Star Health has said that the checks are routine in nature, part of IRDAI’s regular audits and thematic inspections to ensure compliance across the industry.

Disputes between insurers, policyholders and hospitals have picked up pace since the COVID-19 period, and have attracted considerable attention of late, particularly after the release of health insurers’ claim settlement records. An Insurance Brokers’ Association of India (IBAI) report for 2022-23 on the industry’s claims paid track record did not paint a pretty picture, with 11 out of 28 non-life insurers logging claims paid (by amount) ratios of less than 70 percent (claim amount paid out of total sum claimed by policyholders), with most standalone health insurance companies that cater largely to retail policyholders faring poorly on this count.

Also read: IRDAI’s 10% cap on senior citizens’ health insurance renewal premiums: Here’s what it means for policyholders

Partial payout the chief concern

A survey conducted by social media portal and survey firm LocalCircles between June and December 2024 found that five in ten policyholders had experienced either partial or complete rejection of their claims.

The annual report from the Office of the Insurance Ombudsman for 2023-24 noted that 95 percent of health insurance complaints pertained to not being claims entertained either in part or in their entirety.

Besides, according to IBAI officials, one of the reasons why the claims paid ratio in terms of amount settled tends to be lower is because insurers tend to pay out smaller claims without much ado but take much longer to process larger claims, resulting in heartburn for customers.

This apart, insurance companies commonly reject claims citing the reasonable and customary charges clause in insurance policies, according to the Insurance Ombudsman annual report. “Customers should be educated on the terms and conditions of the policy. Insurers should adopt a uniform practice in settling the amount of claim under Cataract treatment,” the report said. It also called for a clear condition or exclusion in the policy document regarding fees charged by specialists, physicians or surgeons engaged in the treatment of critical illnesses during hospitalisation. “In some cases, hospitals do not include the same in their bill and raise a separate bill. As a result, customers are not clear as to the amount to be claimed under the particular policy,” the report said.

The ‘reasonable and customary charges’ clause in health policies states that treatment costs should be the standard charges for the specific provider and ought to be in line with the prevalent charges in the geographical area for similar quality and services.

Now, insurers unilaterally take the call on what is reasonable based on the data they may have collected over time. Policyholders do not have access to this data and cannot assess whether hospitals’ charge structures are reasonable or not. This ambiguity often leads to high levels of dissatisfaction and frustration among policyholders, as ‘reasonable’ costs for treatment procedures could vary as per the patient’s overall health condition, hospital location and the category of hospital—for instance, corporate hospitals tend to charge much higher rates.

Unfair claim denial? Dial ombudsman

If you are unhappy with your insurance company’s decision on your claim, you must first write to its grievance redressal officer (GRO) with your complaint. You can also file your grievance through IRDAI’s Bima Bharosa portal. If the insurer is unable to resolve the complaint to your satisfaction within 30 days or fails to respond, you can approach the insurance ombudsman offices in your district. These offices can adjudicate cases involving amounts of up to Rs 50 lakh.

If the ombudsman feels that the issue can be resolved through mediation, an order will be passed within one month of having received the mutual written consent for such mediation. In other cases, the ombudsman will pass an order within three months from the date of receipt of all the documents and other information from the aggrieved policyholder.

Finally, if all else fails, you can always approach the consumer courts if you are not satisfied with IRDAI’s grievance redressal mechanism.