88% of consumer complaints are due to insurance claims being rejected: Report

Health insurance claims: Insurance Samadhan, a grievance redressal platform, has highlighted that claim rejection is the predominant issue, comprising 88% of complaints by policyholders. The comprehensive report indicated that millennials, aged 25 to 38, are the most active group filing insurance complaints, accounting for 46% of all grievances.

The study, which analysed 9,928 grievances, found that the age group of 39-52 followed with 29%, and 53-66 accounted for 16% of grievances, reflecting a trend where younger individuals are more proactive in seeking resolutions for insurance issues. 

The report also highlighted a notable gender disparity in grievance filings. Males remain the dominant complainants across all age groups; however, females constituted 42% of complaints within the 25-38 age group. This representation diminishes with age. Furthermore, the findings revealed that 62% of complainants are professionals or service employees, and 67% possess at least a graduate degree. Regionally, Maharashtra and Uttar Pradesh reported the highest incidents of grievances among millennials, underscoring regional discrepancies in insurance redressal.

Shilpa Arora, co-founder and COO of Insurance Samadhan, said: "Our data indicates that the younger generation, particularly the millennials, are the most active when voicing their insurance concerns. However, the high percentage shows that despite being tech-savvy and more financially aware than older generations, they still face challenges navigating insurance." 

She emphasised the necessity for enhanced transparency and customer service as India aims for 'Insurance for All by 2047' amid high medical inflation. Arora also called for increased focus on the female consumer segment, especially in rural and older demographics.

Despite growing awareness, 31% of India’s population still lacks health insurance due to low penetration and high costs. The report suggests that the insurance industry must design products catering to different age groups and simplify grievance redressal processes for fairer outcomes. Arora highlighted the adoption of online platforms and rising awareness as factors contributing to the volume of grievances, which also reflects consumer trust in platforms like Insurance Samadhan for swift solutions while indicating gaps in service across various demographics.

Insurance Samadhan has made significant strides in resolving grievances, having settled over 18,000 cases and recovered claims worth INR 160 crores for over 15,000 individuals. The platform's Polifyx app has notably improved the efficiency of grievance resolution by reducing turnaround time by 55%, a testament to its commitment to empowering policyholders with speedy and fair redressal. This initiative supports the broader goal of bolstering the insurance sector’s growth by addressing the needs of policyholders effectively and efficiently.

Rejection or partial approval

Earlier, a survey conducted by LocalCircles stated that more than 50% of health insurance policyholders who submitted claims in the past three years faced either rejection or partial approval.

Of those surveyed who filed a claim in the same timeframe, six out of 10 stated that it took anywhere from six to 48 hours for their claims to be approved and for them to be discharged.

LocalCircles' report revealed that only 25% of participants reported that their health insurance claims in the last three years were fully approved by the insurance company. An additional 6% mentioned that their claims were eventually fully approved after some negotiation with the insurance company.

Furthermore, 33% of respondents indicated that their claim was only partially approved for invalid reasons, while 36% stated that their claims were completely rejected for invalid reasons.

Despite the directive from IRDAI instructing companies to settle claims promptly, and in some cases, within an hour to prevent delays in hospital discharge, it appears that this is not consistently being implemented, as indicated by complaints from health insurance policyholders.

According to data collected from a survey conducted by LocalCircles, out of 30,366 health insurance policy owners, 21% reported that the discharge from hospital after claim settlement took 24-48 hours, while 12% said it took 12-24 hours, 14% claimed it took 9-12 hours, and 12% mentioned it took 6-9 hours. Only 8% of respondents stated that the claim settlement process was instant.