INDIA

Health insurance claim rejections rise 50%: Key reasons for denials

Documentation errors are the leading cause for claim rejections

By Mudit Dube
Jan 03, 2025


What's the story

A recent survey by LocalCircles has highlighted a worrying trend in India's health insurance sector.The study found that nearly 50% of policyholders who filed claims in the last three years experienced partial or complete claim rejections.Conducted between June and December 2024, the survey received responses from over one lakh policyholders across 327 districts in India.

Claim issues
Delays and rejections: A closer look at the data

The survey also shed light on the issue of claim delays.It was discovered that 60% of respondents had to wait between six and 48 hours after claim approval to be discharged from hospitals.Among the 28,700 responses specifically on claim settlements, one-third said their claims were only partially paid while another fifth faced outright rejection on 'invalid' grounds.

Regulatory findings
IRDAI reports on denied health insurance claims

The Insurance Regulatory and Development Authority of India (IRDAI) also recently revealed that 11% of health insurance claims were rejected in FY24, totaling ₹26,000 crore in repudiated claims.This marks a whopping 19% increase over the previous year.The reasons for these rejections vary and often include documentation or policy term-related issues.

Rejection reasons
Documentation errors: A leading cause for claim rejections

Discrepancies in policyholder's documentation emerged as a leading cause for claim rejections.Insurers often deny claims if the paperwork doesn't meet their standards, including errors in diagnosis codes, treatment dates, or basic policy details.Another common reason for denial is non-disclosure or misunderstanding of pre-existing conditions by the policyholder.Many health insurance policies exclude coverage for conditions that existed before the policy was purchased.

Additional factors
Policy lapses and waiting period violations

Policy lapses due to non-payment of premiums or delayed renewals also account for a major reason behind claim rejections.Many policyholders may not be aware of their policy's renewal status until it's too late.Further, violation of the waiting period clause in health insurance policies can also lead to claim denial. This clause usually applies to certain conditions and treatments like maternity, specific surgeries, and treatment for pre-existing illnesses.