The insurance regulatory and development authority of India (IRDAI) has directed that claim settlement should be done immediately or within an hour to ensure no delay in discharge from the hospital. However, six in ten health insurance policy owners surveyed who filed a claim in the past three years said it took between six and 48 hours for their claim to be approved and for them to be discharged, says LocalCircles.
A survey by the community platform reveals that the insurance regulator's directive to settle the claim within one hour does not appear to have made the desired impact, as six in ten health insurance policy owners surveyed who filed a claim in the past three years said it took between six and 48 hours for their claim to be approved and for them to be discharged from the hospital after the settlement of bills. "Based on their own or family experience, over eight in 10 health insurance policy owners surveyed, who had a claim in the past three years, believe that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts. Of those surveyed, five in 10 respondents say they have personally experienced this."
Further, over five in ten health insurance policy owners surveyed who had a claim in the past three years said that the insurance company rejected it or only partially approved it for invalid reasons. "Given the problems they have faced, eight in 10 health insurance policy owners believe health insurance companies still do not have transparent web-based communication systems (tend to rely on emails, calls from hospitals) for claims processing and such systems should be mandated by IRDAI," LocalCircles says.
According to IRDAI data, only 71.3% of the Rs1.2 lakh crore claims that were registered and outstanding during FY23-24 were paid.
The insurance regulator's report reveals that insurers registered over three crore claims during the year for Rs1.1 lakh crore, in addition to the 1.79mn (million) or 17.9 lakh claims for Rs6,290 crore outstanding from earlier years. Of these claims, insurers paid nearly 27mn or 2.7 crore claims, amounting to Rs83,493 crore. This represents 82% of the reported claims by volume and 71.3% by value. Of the claims that were not paid, Rs15,100 crore worth were 'disallowed according to terms and conditions of the policy contract'.
In June 2024, the insurance regulator came up with a series of changes in the health insurance sector aimed at improving service standards. To ensure 100% cashless claim settlement in a time-bound manner, IRDAI mandated that health insurers must accept or reject a cashless claim immediately or latest within one hour and settle such a claim on discharge within three hours, or else bear the additional cost if any. These game-changers were expected to benefit policyholders as they significantly reduce the stress and anxiety associated with claim processing during hospitalisation.
However, LocalCircles says that going by health insurance policy owners' complaints, they are still facing problems.
According to a report 'General Insurance Claim Insights 2023- 24' by the Insurance Brokers Association of India (IBAI), among private sector companies, the highest ratio of claim settlement in FY23-24 was by HDFC Ergo at 94.32% up from 92.1% in the previous fiscal year, while the lowest was by Bajaj Allianz at 73.38% down from 86.89% in FY22-23.
LocalCircles conducted a nationwide comprehensive survey to find out the various problems they faced despite IRDAI's directives. The survey received over 100,000 responses from health insurance policy owners located in 327 districts of India.
Over five in ten health insurance policy owners surveyed who had a claim in the last three years said that the insurance company rejected it or only partially approved it for invalid reasons
Getting health insurance claims can sometimes be difficult if the insurance company decides that those with certain health conditions like diabetes, will not be eligible for it or will be allowed a lower settlement.
The survey asked health insurance policy owners, "When you or your family member had a health insurance claim in the last 3 years, what was the outcome with the insurance company?"
The question received 28,700 responses. About 20% of respondents stated the claim was rejected with invalid reasons, 16% of respondents stated the claim was rejected with invalid reasons, and 33% of respondents stated the claim was only partially approved and with invalid reasons. However, 25% of respondents stated that the claim was fully approved and 6% stated the claim was fully approved but after some back and forth with the insurance company.
To sum up, over five in ten health insurance policy owners surveyed who had a claim in the last three years said that the insurance company rejected it or only partially approved it for invalid reasons.
Six in ten health insurance policy owners surveyed who filed a claim in the last three years said it took between six and 48 hours for their claim to be approved and for them to be discharged
As mentioned, IRDAI has directed that claim settlement should be done immediately or within an hour to ensure no delay in discharge from the hospital. However, health insurance policy owners' complaints show that this is not happening.
The survey asked health insurance policy owners, "When you or your family member had a health insurance claim in the last three years, how long did it take on the discharge day with the hospital and the insurance company to get you out of the hospital?"
Out of 30,366 health insurance policy owners who responded to the question, 21% stated the discharge from hospital after claim settlement process took 24-48 hours, 12% stated the process took 12-24 hours, 14% stated the process took nine to 12 hours, 12% stated the process took six to nine hours, 21% stated the process took three to six hours, 12% stated the process took one to three hours and only 8% stated it was processed instantly.
To sum up, six in ten health insurance policy owners surveyed who filed a claim in the past three years said it took between six and 48 hours for their claim to be approved and for them to be discharged.
Over eight in ten health insurance policy owners surveyed who had a claim in the last three years believe that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts; five in ten say it happened with them personally
The survey next asked health insurance policy owners, "Do you believe the long time taken to process a health insurance claim works in favor of the insurance company as policyholders tend to get tired of waiting and accept the decision of low amount approved (leading to higher out of pocket payment)?"
The question received 27,371 responses. 47% of respondents stated 'Yes, happened with me or my family too', 34% of respondents stated 'didn't happen with us but has happened with many in our close network', 7% of respondents stated 'don't believe this scenario is common' and 12% of respondents did not give a clear answer.
To sum up, over eight in ten health insurance policy owners surveyed who had a claim in the past three years believe that claims are delayed by design so policyholders get tired of waiting and accept lower claim amounts. In fact, five in ten respondents say they have personally experienced this.
Eight in ten health insurance policy owners believe health insurance companies still don't have transparent web-based communication systems (tend to rely on emails, calls from hospitals) for claims processing and such systems should be mandated by IRDAI
Some of the health insurance companies are not transparent in their operations such that they don't specify upfront what are the health issues that will be covered or not covered under the policy. Similarly, some companies provide cover in tie-up with banks but don't provide the document/ card to those insured.
Given the problems created by the lack of transparency in many cases, the survey asked health insurance policy owners, "Many health insurance companies still don't have transparent portal and web-based communication systems for claims processing and rely on emails and calls from hospitals even for pre-approved cashless processing. Should IRDAI (insurance regulator) mandate 100% web-based processing of claims with policyholders kept informed at every step?"
Out of 15,031 who responded to the question 83% stated "Yes, this is not happening and is a must", 9% of respondents stated "Yes, this is already happening and functional" and 8% of respondents did not give a clear answer.
To sum up, eight in ten health insurance policy owners believe health insurance companies still don't have transparent web-based communication systems (tend to rely on emails, calls from hospitals) for claims processing and such systems should be mandated by IRDAI.
LocalCircles says it will be sharing the survey findings with the insurance regulator IRDAI and other authorities so that further policy interventions and actions are undertaken to get the claims settled hassle-free and in a transparent manner.
