Nearly half of health insurance policyholders faced full or partial claim rejection in last three years: Study

Claim rejection is a chief cause of concern amongst health insurance policyholders

Five in ten health insurance policyholders who filed claims in the last three years said their insurers either partially or completely rejected their claims, a study conducted by social media portal and survey firm LocalCircles has found. The policyholders who participated in the survey felt that their claims were unfairly repudiated.

According to the firm, the survey, which was conducted between June and December 2024, received over 1 lakh responses from policyholders across 327 districts in India. Out of this, the responses to the question around claim settlement totalled 28,700 and 33 percent said their claims were only partially paid and another 20 percent said their claims were rejected due to ‘invalid’ reasons.

Also read: Insurers rejecting claims after branding the expenses 'unreasonable' a key cause of heartburn 

Discharge delays another concern

Besides claim settlement, the other key grouse of policyholders was the time to taken by insurers to co-ordinate with the hospitals and approve discharge. Out of the 30,366 respondents who replied to the question on discharge delays, six in ten respondents who had filed claims in the last three years said they had to wait for between six and 48 hours to secure discharge after getting claims approved.

What should be a cause for concern for the insurers, and more importantly, the Insurance Regulatory and Development Authority of India (IRDAI), is that eight in ten policyholders who had filed claims in the last three years were convinced that their claims were delayed by design, so that “policyholders get tired of waiting and accept lower claim amounts. Eight in 10 health insurance policy-owners want IRDAI to mandate transparent web-based communication systems (tend to rely on emails, calls from hospitals) for claims processing,” LocalCircles said. Out of 15,031 who sent in their views on the need for web-based communication systems for claim processing, 83 percent stated that the IRDAI should mandate such frameworks.

Also read: Hospitalisation costs need to come down amid 'vengeance' hikes, insurers tell NITI Aayog

A chequered track record of claim settlement

As per the Insurance Brokers’ Association of India’s (IBAI) claim analysis for the period ended March 31, 2023, all public sector insurers, overall, fared better than their private counterparts on claim as far as claims paid (by amount) ratio was concerned.

New India topped the list of insurers in terms of claims paid by policy count as well as amount paid. Its claim paid ratio by policy count was 95.04 percent and it was 98.74 percent in terms of amount paid, the highest in the industry.

It followed by Aditya Birla Health at 94.52 percent, though its record in terms of claim amounts paid was much lower at 71.56 percent. IFFCO Tokio (91.7 percent) and Bajaj Allianz General Insurance (90.29 percent) were the other two players that settled over 90 percent of the claims received, as per the claim insights report.

Next on the list was SBI General with a satisfactory record in terms of claim paid ratio (by policy count) of 88.86 percent as well amount paid (88.30 percent). 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 quickly, but take much longer to process larger claims.