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The pervasive issue of rejected health insurance claims has become a significant concern for policyholders in India. Recent reports, including the Insurance Brokers’ Association of India (IBAI) findings and a LocalCircles survey, reveal that a substantial portion of policyholders experience complete or partial claim rejections. This highlights a critical gap between the expectations of insured individuals and the realities of claim processing within the insurance industry. The primary reasons cited for these rejections are multifaceted, stemming from ambiguities in policy wording, disagreements over the reasonableness of medical charges, and disputes concerning pre-existing conditions.
One of the most frequently cited causes of claim rejection is the interpretation of ‘reasonable and customary charges.’ Insurance companies often leverage this clause to justify reductions or denials, citing charges exceeding what they deem acceptable. The lack of transparency regarding how insurers determine ‘reasonableness’ creates a power imbalance, leaving policyholders with limited recourse to challenge these decisions. The variation in charges across different hospitals, based on factors such as location, type, and the individual patient's health status, further complicates the issue. Corporate hospitals, for example, typically have significantly higher charge structures compared to public or smaller private hospitals. This lack of standardization and clear guidelines leaves policyholders vulnerable to arbitrary decisions about claim validity.
The handling of pre-existing conditions represents another significant area of contention. The IRDAI defines pre-existing diseases as ailments for which treatment or diagnosis occurred within 36 months of policy purchase. Insurers typically impose waiting periods, often up to three years, before covering treatment for such conditions. This is predicated on the principle that insurance is designed to protect against unforeseen events, not pre-existing known health issues. However, the application of this rule can be fraught with complexities, particularly when dealing with chronic conditions or situations where the policyholder may not have a complete or accurate understanding of their medical history. Furthermore, the potential for claim rejection or policy cancellation due to non-disclosure of even seemingly minor conditions can leave policyholders feeling vulnerable and uncertain.
To mitigate the risks of claim rejections, policyholders must actively engage in responsible policy management. It is crucial to accurately and comprehensively complete the proposal form, ensuring that all relevant health information, even what might seem minor, is disclosed. Policyholders should not rely solely on agents to complete this form, as misinterpretations or omissions can have serious repercussions. Transparency is paramount, even if higher premiums are a consequence. When porting policies to new insurers, it is important to remember that the new insurer may not automatically have access to previous claim records; therefore, a complete disclosure of health history remains crucial. Understanding the specific policy terms, particularly regarding room rent sub-limits, is equally vital to avoid partial claim settlements.
In situations where disputes arise, policyholders possess established avenues for redress. The initial step involves contacting the insurance company’s grievance redressal officers (GRO). Simultaneously, filing a complaint through IRDAI’s Bima Bharosa portal provides an additional avenue for formal complaint submission. If the insurer fails to resolve the issue satisfactorily within 30 days, or doesn't respond at all, policyholders can escalate their case to the insurance ombudsman offices within their district. Crucially, this process does not incur any fees. The ombudsman will either mediate a resolution, aiming for a decision within a month, or issue a final award within three months of receiving all necessary documentation. This mechanism provides a crucial layer of protection and accountability for policyholders facing unfair or unreasonable claim rejections.
The high rate of health insurance claim rejections underscores a need for improved transparency, clearer policy language, and greater accountability within the insurance sector. Addressing these systemic issues requires a collaborative effort from insurers, regulators, and policyholders alike. While the insurance ombudsman provides a valuable recourse for resolving disputes, proactive measures by policyholders, such as thorough understanding of their policies and complete disclosure of relevant health information, are essential in preventing conflicts from arising in the first place. Furthermore, insurers need to adopt more consistent and transparent methodologies for evaluating claim reasonableness, ensuring fair and equitable treatment for all policyholders.
Source: Health insurance claim rejected? Approach the insurance ombudsman for complaint resolution