Health Insurance Claims Face Massive Rejection: A Deep Dive into FY23-24
In the fiscal year 2023-24, health insurance companies in India rejected claims worth INR 26,037.65 Crore. Specific companies like Care Health Insurance, ICICI Lombard, and Niva Bupa have drawn complaints. IRDAI in radar to implement prevention measures to unfair practices. The Union government has revealed that insurance companies in India rejected claims worth a staggering ₹26,037.65 crore in the financial year 2023-24 (FY23-24). This includes claims of ₹15,100.14 crore that were disallowed as per the terms and conditions (T&C) of the policies and ₹10,937.17 crore repudiated by health insurance companies. The data was shared in response to a question in the Lok Sabha by Pankaj Chaudhary, the Union Minister of State for Finance. Public Sector Insurers Lead in Claim Rejections Among insurers, The New India Assurance Co. Ltd., a public sector insurer, topped the list with ₹7,038.04 crore worth of rejected claims in FY23-24. It was followed by ICICI Lombard General Insurance Co. Ltd., which rejected ₹2,016.81 crore in health insurance claims.The rejection of such a large volume of claims has raised concerns among policyholders and Members of Parliament (MPs), including Balashowry Vallabhaneni and Dean Kuriakose, who sought details of health insurance claims rejected during the year. Claim Settlement Ratios: Public vs. Private Insurers According to the Insurance Regulatory and Development Authority of India (IRDAI), claim settlement rates varied significantly between public and private insurers. – For every ₹10,000 collected in premiums, public sector insurers paid ₹10,122 in claims.– Private sector general insurers paid ₹7,077 for every ₹10,000 collected.– Stand-Alone Health Insurers (SAHI) had the lowest payout, at ₹5,463 for every ₹10,000 collected. However, when it comes to settling claims based on volume, private sector insurers performed better. For every 10,000 claims received: – Public sector insurers paid ₹7,984 claims.– Private sector general insurers settled ₹8,639 claims.– Stand-alone health insurers (SAHI) settled ₹8,635 claims. Health Insurance Premium Collections by State The MPs also requested state-wise data on health insurance premiums collected. According to the government, Maharashtra led the country, collecting a massive ₹31,258 crore in health insurance premiums during FY23-24. Karnataka followed with ₹12,017 crore, while Tamil Nadu stood third with ₹9,738 crore.This data underscores Maharashtra’s dominance in India’s health insurance sector, with its premium collections nearly 2.6 times higher than Karnataka’s and 3.2 times that of Tamil Nadu’s. Growth in Health Insurance Premiums Over Three Years Health insurance premiums in India have shown a consistent upward trend over the past three financial years: – FY21-22: ₹73,052 crore collected.– FY22-23: ₹89,432 crore collected.– FY23-24: ₹1.07 lakh crore collected. This reflects a 46.5% growth in health insurance premiums over three years, signaling increased awareness and adoption of health insurance policies. However, the simultaneous rise in claim rejections raises concerns over whether policyholders are getting adequate coverage and fair settlements. IRDAI’s Measures to Improve Claim Settlement 1. Faster Claim Processing and SettlementTo improve efficiency, IRDAI has set shorter timelines for claim processing across different settlement types, including cashless claims, reimbursements, and pre-authorizations. This ensures that policyholders receive timely approvals and claim payouts without unnecessary delays. 2. Detailed Communication of Claim RejectionsIf a claim is partially or fully rejected, insurers must provide a detailed explanation to the claimant. This must include specific references to the terms and conditions of the policy under which the claim was denied. This step aims to eliminate ambiguity and ensure that policyholders clearly understand the reasons behind the rejection. 3. Strengthened Grievance Redressal MechanismIn cases where policyholders are dissatisfied with an insurer’s decision, they can escalate their complaint to the insurer’s Grievance Redressal Officer (GRO). If the issue remains unresolved, they have the right to approach the Insurance Ombudsman at no additional cost. IRDAI mandates that insurers must comply with the ombudsman’s decision within 30 days. Failure to do so will result in a penal charge of ₹5,000 per day for each day of delay. 4. Approval Process for Claim RejectionsTo prevent unjust claim repudiations, IRDAI mandates that no claim can be rejected without approval from the insurer’s Product Management Committee (PMC) or a dedicated Claims Review Committee (CRC), a three-member sub-group of the PMC. This ensures that all rejected claims undergo proper scrutiny before final denial. 5. Interest Penalty on Delayed PaymentsIf an insurer fails to settle claims within the stipulated timeline, they are required to automatically compensate the policyholder. The penalty involves interest payments at the bank rate plus 2% for the delayed period. This provision ensures accountability and encourages insurers to adhere to timelines.