Health insurance claims rejection up 19.10% in FY24: Irdai report

India’s insurance companies rejected 11 per cent of health claims and had 6 per cent pending as of March 2024, according to the industry regulator’s annual report.

 

Health policy claims worth Rs 26,000 crore were disallowed and "repudiated" by insurers in the year ending March 2024, marking a 19.10 per cent increase from the year before. The rejection amount was Rs 21,861 crore in the year ending March 2023, according to 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.

 

Insurance penetration

 

The report highlighted that overall insurance penetration in India declined for the second consecutive year in 2023-24, dropping to 3.7 per cent. This marks a decrease from 4 per cent in 2022-23 and 4.2 per cent in 2021-22 during the pandemic.

 

Settlement ratios

 

Irdai’s report commented on the performance of insurers in claim settlement ratios (the percentage of number of claims an insurance company settles within a specific period.). Public sector insurers had a settlement ratio of 103.38 per cent in 2023-24, indicating that they paid out more than they collected in premiums. In contrast, private insurers maintained a ratio of 88.71 per cent, while standalone health insurers struggled with a low ratio of only 64.71 per cent. This disparity suggests that consumers may face varied experiences depending on their choice of insurer.

 

Death claim ratio

 

Life insurance companies paid Rs 48,512 crore in death claims for the year ending March 2024, an increase from Rs 46,380 crore in the previous year. Rs 28,868 crore was paid for individual policies and Rs 19,644 crore for group policies.

 

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