The reasons for dissatisfaction with insurance providers during the pandemic may be many. But health insurers’ unwillingness or inability to fully reimburse COVID-19 claims was the chief cause of customer dissatisfaction. Partial settlement and insistence on hospitalisation for treatment topped the list of disputes.
“Hospitals had charged patients a particular amount, but the quantum reimbursed by insurers was much lower, so they approached us. Then, there were insurers who had denied claims because the treatment was taken at home due to lack of hospital beds,” said Milind Kharat, Insurance Ombudsman, Mumbai and Goa. The Mumbai office has disposed of 40 COVID-19-related complaints so far. Some claims were denied initially on the grounds that the pandemic was not specifically covered as per policy terms and conditions. The IRDAI had, however, in March, asked insurers to quickly process COVID-19 claims .
Settlement for treatment at home
Since even central and several state governments allow COVID-positive individuals to isolate themselves and undergo treatment at home, insurance companies’ contentions did not hold ground. “Hospital beds were not available and patients were simply following doctors’ advice. So we conducted hearings and insurers agreed to settle the (domiciliary hospitalisation) claims,” said Kharat.
Over the last three months, however, several insurers have proactively agreed to pay for treatment taken at home. Moreover, the Insurance Regulatory and Development Authority of India (IRDAI) mandated Corona Kavach plans specifically permit homecare treatment.
The General Insurance Council (GI Council) rate chart for COVID-19 treatment has meant that many policyholders have had to pay for any amount exceeding these rates out of their pockets, with insurers sticking to the council’s package rates. However, policyholders are not bound to accept insurers’ decisions and can appeal to insurance ombudsman offices. “GI Council rates are not mentioned in the policy documents, but have been devised after broad agreements amongst insurers. We take them as guiding rates. Policies state that hospital expenses that are medically necessary will be reimbursed. Also, what seems reasonable for insurers need not be so for customers or hospitals. So, we examine such complaints and take a call on a case-to-case basis, depending on the policy’s terms and conditions,” said Kharat.
Overall, insurance ombudsman offices in India received 27,257 complaints in the financial year 2019-20, an increase of 20 percent compared to the previous financial year. Nearly half – 49 percent – of the complaints pertained to life insurance. Health insurance complaints constituted close to 39 percent, while the balance pertained to the general insurance sector. The share of life insurance was much higher, at over 52 percent last year, with non-life accounting for 48 percent of the complaints received during 2018-19.
Rise in complaints
Overall, the Mumbai centre recorded 4,432 cases in 2019-20, up 18 percent compared to last financial year. In the current financial year, the office recorded 1,940 cases till October 2020. Over 75 percent of the total complaints pertained to general insurance, with life insurance’s share being much lower, at 25 percent. In the life insurance segment, most complaints are made about mis-selling of policies. Moreover, out of general insurance complaints, a whopping 70 percent were related to health insurance. In the case of health insurance, denial or partial settlement of claims constitute the chief grounds of grievances. Most common causes of disputes include treatment for pre-existing diseases, which are not payable during the initial 3-4 policy years and other exclusions. Proportionate deduction due to room rent sub-limits in the policy is another common grievance.
The Insurance Ombudsman annual report also pointed to the lack of clarity in health insurance terms and conditions. “A few sections such as proportionate clauses require a relook in the interest of policyholders. Similarly, the enhancement of the sum insured, active line of treatment and reasonable and customary charges clauses require proper interpretation,” the report noted.
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