Health insurance claim denied? Insurers now have to explain why
What's the story
The Insurance Regulatory and Development Authority of India (IRDAI) has mandated insurers to provide detailed explanations for rejecting health insurance claims. The move comes after a significant number of claims were rejected in the fiscal year 2024-25, despite improvements in claim-processing timelines. Under the new rules, insurers will have to mention specific policy clauses that led to claim rejections.
Claim statistics
Health insurance claims worth ₹94,248cr processed
The IRDAI's Annual Report for FY 2024-25 shows that insurers processed a whopping 3.26 crore health insurance claims, paying out ₹94,248 crore in total. However, a staggering 8% of these claims were rejected. This means that nearly one in every 12 policyholders who filed a claim did not receive any payout at all.
Rising complaints
Grievances on Bima Bharosa platform up by 41%
Consumer dissatisfaction with health insurance has also been on the rise. Grievances registered on IRDAI's Bima Bharosa platform increased by 41% year-on-year to 1.37 lakh in FY25 from 97,503 in FY24. Nearly 70% of complaints in the health and general insurance segment were related to claim rejections, delays, partial payments or documentation disputes.
Dispute origins
Disputes often arise from specific policy clauses
Health insurance disputes often stem from waiting periods, exclusions, room-rent limits, sub-limits, co-payment clauses and disclosure-related issues. These restrictions are often discovered by customers only when they file a claim. This has widened the gap between what policyholders expect their insurance to cover and what insurers actually pay out.
Transparency push
New IRDAI mandate aims to improve transparency
IRDAI's latest requirement seeks to tackle one of the biggest pain points in the claims process: lack of clarity. By mandating insurers to explain claim denials and mention relevant policy clauses, the regulator hopes to make claim decisions more transparent and easier for policyholders to scrutinize. This could help them determine if a rejection is justified and pursue further action through grievance redressal channels or insurance ombudsman if necessary.