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Health insurers in India disallowed claims worth Rs 15,100 crore during the financial year 2023-24, representing 12.9 per cent of total claims filed, according to the latest annual report by the Insurance Regulatory and Development Authority of India (Irdai).
Claim rejection
A claim is rejected or disallowed when an insurance company refuses to process it due to specific issues with its validity. This means the insurer has not yet evaluated the claim for coverage, but has rejected it outright due to errors or discrepancies in the policyholder’s documentation, terms, or procedures. On the other hand, claim repudiation occurs when the insurer denies the claim after a review, determining that it does not meet the terms and conditions of the policy.
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The report highlights that of the Rs 1.17 trillion in total health insurance claims filed, insurers paid out Rs 83,493.17 crore, settling 71.29 per cent of claims. Additionally, claims worth Rs 10,937.18 crore (9.34 per cent) were repudiated, while Rs 7,584.57 crore (6.48 per cent) remained outstanding.
In terms of volume, insurers handled approximately 3.26 crore health insurance claims during the financial year, successfully settling 2.69 crore claims, achieving an 82.46 per cent settlement rate. The average claim amount paid stood at Rs 31,086.
The health insurance sector showed robust growth, with general and health insurance companies collecting premiums worth Rs 1,07,681 crore (excluding personal accident and travel insurance), marking a 20.32 per cent increase from the previous year. These companies provided coverage to 57 crore lives under 2.68 crore health insurance policies.
Third-Party Administrators (TPAs) played a crucial role in claims settlement, handling 72 per cent of all claims, while the remaining 28 per cent were processed through in-house mechanisms. Notably, 66.16 per cent claims were settled through the cashless mode, with reimbursement accounting for 39 per cent of settlements.
The insurance landscape in India currently comprises 25 general insurers and 8 standalone health insurers. Public sector giants including New India, National, and Oriental Insurance have expanded their operations internationally, generating Rs 154 crore in gross premiums from health, personal accident, and travel insurance, covering 1.17 million lives in foreign markets.
The report also revealed significant coverage under personal accident insurance, with 1650.5 million lives insured during the fiscal year. This includes 901 million lives covered under government flagship schemes such as Pradhan Mantri Suraksha Bima Yojana (PMSBY), Pradhan Mantri Jan Dhan Yojana (PMJDY), and IRCTC travel insurance for e-ticket passengers.
What insurance customers should do
To mitigate the risk of claim rejection, policyholders are encouraged to take proactive steps.
Thorough documentation: Ensure all required documents are complete and accurate before submission.
Understand policy terms: Familiarise yourself with your policy's terms and conditions, especially regarding pre-existing conditions and waiting periods.
Seek clarification: If uncertain about any aspect of your policy, consult with your insurer or a knowledgeable advisor before making a claim.
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