Insurance claims: Over 50% health cover claims faced rejection or partial approval, says survey  

Health insurance claims: A survey conducted by LocalCircles found that over 50% of health insurance policyholders who submitted claims in the last three years experienced either rejection or partial approval.

Of the policyholders surveyed who filed a claim within the same timeframe, six in 10 reported that it took between six and 48 hours for their claim to be approved and for them to be discharged.

LocalCircles has received numerous complaints on its platform regarding delays in claim settlements over the past six months, prompting a nationwide survey to identify the challenges faced by policyholders despite the Insurance Regulatory and Development Authority of India's directive for expedited settlement.

In its report, LocalCircles found that only 25% of survey 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 claim was eventually fully approved following some back-and-forth with the insurance company.

Furthermore, 33% of respondents stated that their claim was "only partially approved with invalid reasons", while 36% said their claim was outright rejected with invalid reasons. Despite IRDAI's directive for companies to settle claims promptly, with some even within an hour to prevent delays in hospital discharge, health insurance policyholders' complaints indicate that this is not being consistently implemented, as highlighted by LocalCircles.

Based on data from LocalCircles, out of 30,366 health insurance policy owners surveyed on claim settlement timelines, 21% reported that the discharge from hospital after claim settlement took 24-48 hours, 12% said it took 12-24 hours, 14% claimed it took 9-12 hours, and 12% mentioned it took 6-9 hours. Only 8% stated that the process was instant.

In the private sector, HDFC Ergo had the highest claim settlement ratio in 2023-24 at 94.32%, while Bajaj Allianz had the lowest at 73.38%, as per a report from the Insurance Brokers Association of India. The majority of health insurance policyholders surveyed feel that there is a lack of transparent web-based communication systems for claims processing and recommend that IRDAI mandate such systems.

LocalCircles intends to share the survey results with IRDAI and other relevant authorities to advocate for potential policy changes.

IRDAI report

The Insurance Regulatory Authority of India (IRDAI) released a report in December indicating that health insurance claims denial rates in India reached 11% with 6% of claims pending as of March 2024. The report highlighted that insurance companies disallowed and repudiated health policy claims amounting to Rs 26,000 crore during the fiscal year ending in March 2024, showing a substantial increase from the previous year.

The rejection amount saw a significant 19.10% increase from Rs 21,861 crore in the year ended March 2023, underscoring a notable trend of high claim rejections in the health insurance industry. The annual report also revealed that claims disallowed by insurers amounted to Rs 15,100 crore, up from Rs 12,754 crore in the prior year. Furthermore, insurers repudiated claims totaling Rs 10,937 crore in FY24, compared to Rs 9,107 crore in the previous fiscal year.

When an insurance company does not accept a claim due to issues with its validity, it is considered rejected. This rejection often occurs when there are mistakes or inconsistencies in the policyholder's documentation, terms, or procedures. On the other hand, when an insurer denies a claim after reviewing it and determining that it does not align with the terms and conditions of the policy, it is referred to as claim repudiation.

The claim settlement ratio of an insurance company is calculated by comparing the number of successfully resolved claims to the total number of claims received within a specific timeframe. For example, if a company receives 100 claim requests in a year and resolves 90 of them, its claim settlement ratio would be 90%. An insurer with a claim settlement ratio above 85% is considered favorable, indicating the company's reliability.