6 in 10 health insurance policy owners surveyed who had a claim waited 6-48 hours for discharge; Want IRDAI to mandate transparent & web-based claims processing

January 3, 2024, New Delhi: Only 71.3% of the INR 1.2 lakh crore claims that were registered and outstanding during FY24 were paid, according to Insurance Regulatory and Development Authority of India (IRDAI) data.

The insurance regulator's report reveals that insurers registered over 3 crore claims during the year for INR 1.1 lakh crore, in addition to the 17.9 lakh claims for INR 6,290 crore outstanding from earlier years. Of these claims, insurers paid nearly 2.7 crore claims, amounting to INR 83,493 crore. This represents 82% of the reported claims by volume and 71.3% by value. Of the claims that were not paid, INR 15,100 crore worth were "disallowed according to terms and conditions of the policy contract".

In June 2024, after a LocalCircles report highlighted the slow health insurance claim processing, the insurance regulator IRDAI 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, the regulator mandated that health insurers must accept/reject a cashless claim immediately or latest by within one hour and settle such a claim on discharge within three hours, 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, going by health insurance policy owners’ complaints on LocalCircles, other social media and media reports, they are still facing problems. Among private sector companies, the highest ratio of claim settlement in 2023-24 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 2022-23, according to a report ‘General Insurance Claim Insights 2023-24’ by the Insurance Brokers Association of India (IBAI).

LocalCircles, which has also received thousands of complaints on its platform about delays in getting claim settlements in the last 6 months, has conducted a nationwide comprehensive survey to find out the various problems they have faced despite IRDAI’s directives. The survey received over 100,000 responses from health insurance policy owners located in 327 districts of India. 67% respondents were men while 33% respondents were women. 46% respondents were from tier 1, 30% from tier 2 and 24% respondents were from tier 3, 4, 5 and rural districts.

Over 5 in 10 health insurance policy owners surveyed who had a claim in the last 3 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. 20% of respondents stated the “claim was rejected with invalid reasons”; 16% of respondents stated the “claim was rejected with invalid reasons”; 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 “claim was fully approved but after some back and forth with the insurance company”. To sum up, over 5 in 10 health insurance policy owners surveyed who had a claim in the last 3 years said that the insurance company rejected it or only partially approved it for invalid reasons.

6 in 10 health insurance policy owners surveyed who filed a claim in the last 3 years said it took between 6 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. But 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 3 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 9-12 hours”; 12% stated the "process took 6-9 hours”; 21% stated the "process took 3-6 hours”; 12% stated the "process took 1-3 hours”; and only 8% stated “it was processed instantly”. To sum up, 6 in 10 health insurance policy owners surveyed who filed a claim in the last 3 years said it took between 6 and 48 hours for their claim to be approved and for them to be discharged.

Over 8 in 10 health insurance policy owners surveyed who had a claim in the last 3 years believe that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts; 5 in 10 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 favour of the insurance company as policy holders 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 8 in 10 health insurance policy owners surveyed who had a claim in the last 3 years believe that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts. In fact, 5 in 10 respondents say they have personally experienced this.

8 in 10 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 policy holders 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, 8 in 10 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.

In summary, over 5 in 10 health insurance policy owners surveyed who had a claim in the last 3 years said that the insurance company rejected it or only partially approved it for invalid reasons. The insurance regulator’s directive to settle the claim within one hour does not appear to have made desired impact as 6 in 10 health insurance policy owners surveyed who filed a claim in the last 3 years said it took between 6 and 48 hours for their claim to be approved and for them to be discharged from the hospital after settlement of bills. Based on their own or family experience, over 8 in 10 health insurance policy owners surveyed, who had a claim in the last 3 years, believe that claims are delayed by design so that policyholders get tired of waiting and accept lower claim amounts. Of those surveyed, 5 in 10 respondents say they have personally experienced this. Given the problems they have faced, 8 in 10 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 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.

Survey Demographics

The survey received over 100,000 responses from health insurance policy owners located in 327 districts of India. 67% respondents were men while 33% respondents were women. 46% respondents were from tier 1, 30% from tier 2 and 24% respondents were from tier 3, 4, 5 and rural districts. The survey was conducted via LocalCircles platform, and all participants were validated citizens who had to be registered with LocalCircles to participate in this survey.