Health insurance claim denial: Check reasons against policy terms first

Health and general insurers paid 82 per cent of claims by volume and 71.3 per cent by value (Rs 1.17 crore), according to the Insurance Regulatory and Development Authority of India’s (Irdai’s) annual report for 2023-24. Of the remaining 28.7 per cent by value, nearly 13 per cent were rejected and over 9 per cent repudiated. 

Understanding the distinction between rejection and repudiation is crucial. “Rej­ection occurs before a review or assessment, often due to incomplete information or errors. It is not permanent and can be reversed. Repudiation, on the other hand, happens when an insurer reviews a claim, and decides it is not covered under a policy’s clauses. It is permanent,” says Shilpa Arora, co-founder and chief operating officer, Insurance Samadhan. 

 

Why do claims get denied?

  Health insurance claims are often denied due to exclusions in policy terms. Buyers frequently overlook the fine print or misinterpret clauses.  

“Permanent exclusions, hospitalisation during waiting periods, non-disclosure of pre-existing conditions, treatment at excluded hospitals, and premium payment lapses are the main reasons for rejections,” says Abhijeet Ghosh, joint executive 

president, Star Health and Allied Insurance. 

 

Initial steps

  Policyholders should first und­er­stand the reason for claim de­nial. “Review the reasons cited by the insurer and verify if they align with policy terms. If denial is due to missing or inadequate documents, submit them promptly. Insurers typically provide an escalation matrix in their rejection letters to guide policyholders,” says Ghosh. 

Start by contacting the insurer’s customer support cell through email or helpline numbers. Share basic details like the claim reference num­ber, explain the issue, seek clarification, and then register a complaint. If unsatisfied, escalate the issue to the insurer’s grievance cell. “Justify why the claim should be paid. Accor­ding to Irdai guidelines, the cell must respond within 14 days. If still unsatisfied, escalate the matter to the Grievance Redressal Officer (GRO),” says Arora. 

If the GRO does not resolve the issue, approach Bima Bharosa, Irdai’s grievance cell. If a resolution is still not reached, the next step is the Office of Insurance Ombudsman or Bima Lokpal. 

Ombudsman for mediation

  India has 17 ombudsman offices. A complainant can locate the relevant office on Irdai’s website. Complaints can be submitted online, via email with supporting documents, through the Council for Insurance Ombudsmen’s 

portal, or by post. 

“An ombudsman acts as a mediator between insurer and insured for disputes involving amounts up to Rs 50 lakh. Complaints must be filed within a year of the insurer’s final response,” says Arora. 

Escalate to consumer court

  If the ombudsman’s decision is unsatisfactory, policyholders can file a complaint in a consumer court. While individuals can represent themselves, Arora advises hiring a lawyer for complex cases or disputes involving large amounts. 

Choose the appropriate forum based on claim amounts. “The District Consumer Disp­utes Redressal Forum handles claims up to Rs 50 lakh. State Redressal Commissions addr­ess claims between Rs 50 lakh and Rs 2 crore, while the National Com­mission handles claims exceeding Rs 2 crore,” says Nishant Datta, advocate, Delhi HC. 

Case papers should include supporting evidence such as receipts, medical reports, and invoices, along with detailed explanations of why the rejection was unjustified. 

“File complaints within two years of the dispute. Specify the relief sought, such as settlement or compensation. Present a professional, evidence-based case to enhance the chances of success,” says Datta.