At a recent summit of the Confederation of Indian Industry (CII), Satyajit Tripathi, member (distribution) of the Insurance Regulatory and Development Authority of India (Irdai), highlighted that complaints in general insurance, especially in health insurance, revolve primarily around payment of claims. In many cases, he said, the claim amount paid is significantly less than expected or claims are rejected outright.
Main reasons for the reduction in payments
Policies have several exclusions and limitations. “If the policyholder does not take these into account at the time of purchase, it can result in a lower claim settlement amount and an unpleasant experience,” says Parthanil Ghosh, director and chief commercial officer, HDFC ERGO General Insurance.
Many problems arise due to the way health insurance is bought and sold. “Customers often sign without reading the terms and conditions, leading to misunderstanding of the cover and ultimately partial payments,” says Amit Chhabra, business head, general insurance, Policybazaar.
Sublimits and caps: Some policies impose minimum limits on room rent, surgeries and treatments. Older policies, for example, offered room rent coverage for a fixed amount or up to 1 per cent of the sum insured. “If a policyholder opts for a room at a higher cost than allowed, the insurer may pay a lower claim,” says Ghosh.
Staying in a higher category room may result in a proportionally lower total bill.
Copayment and deductible: Many policies, especially for seniors, include co-pays. “If the co-pay is 20%, the insurer will pay 80% of the bill and the insured will have to cover the remaining 20% out of pocket,” Chhabra explains.
In case of policies with excess, like Rs 1 lakh, the policyholder has to pay the bills up to that amount. The insurer covers only the bills above that limit.
ExclusionsCertain conditions or treatments, such as cosmetic procedures, are not covered by the policies. “No claim will be paid for these exclusions,” says Ghosh.
ConsumablesItems such as personal protective equipment (PPE), gloves and masks used during treatment are often excluded. Consumables can account for 7 to 10 percent of the total bill. “Traditionally, many policies did not cover consumables,” says Chhabra.
Unusual expenses: Insurers may classify some expenses as unreasonable or unusual and refuse to cover them.
“Non-medical expenses such as additional meals for visitors or cosmetic items are also not covered. The insurer does not bear these costs,” says Kapil Mehta, co-founder of SecureNow Insurance Broker.
How to avoid this problem?
When purchasing a policy, it is essential to read and understand the document carefully. “It is important to understand the inclusions and exclusions of the policy,” says Ghosh.
Chhabra also suggests making informed choices. “If you can afford it, opt for policies with no co-pays or deductibles,” he says.
Ghosh also recommends purchasing comprehensive health coverage to reduce out-of-pocket costs.
Many insurers now offer the consumables clause, which Mehta recommends taking out. “It is also advisable to receive treatment at hospitals in the insurer’s network. Deductions are usually lower because the insurer trusts them,” he adds.
Finally, if you feel you have been treated unfairly, you can lodge a complaint with the insurance ombudsman or change providers.
What causes a claim to be rejected?
· Fraudulent claims, for example, for an injury that did not arise or was caused intentionally.
· Claim made within the waiting period for pre-existing disease (PED); or for slowly evolving conditions such as arthritis, cataracts, etc. that have a specific waiting period
· Claim filed or supporting documents submitted late
· Accident under the influence of alcohol or drugs; damages caused by negligence of the insured
· Claiming something that is beyond coverage, such as dental treatment (on a policy that does not cover it)
What can you do?
· Declare PEDs honestly
· Buy a policy with shorter waiting periods for PED
· Choose an insurer that has a higher claim settlement rate
· Avoid blacklisted hospitals
First published: September 16, 2024 | 20:17 IS
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