What is the story about?
Health insurance is often seen as a financial safety net - but for many policyholders, that safety net comes with fine print they only discover when it’s
too late. Data shows that while a majority of claims do get settled, a significant number still run into trouble. According to the Insurance Regulatory and Development Authority of India (IRDAI), 82% of health insurance claims were settled by volume in FY 2023–24. But by value, only 71.3% were paid, indicating widespread deductions and partial settlements. More concerning: nearly 13% of claims were rejected and over 9% repudiated - meaning roughly one in eight claims gets denied altogether. At the same time, consumer dissatisfaction appears to be rising. Health insurance complaints climbed to 73,729 in FY 2025–26 (up to February), up 14.5% from the previous year. A survey by LocalCircles adds another layer to the problem - 40% of claimants reported facing full or partial rejection without adequate explanation.
The Fine Print Problem
Industry experts say most claim rejections are not arbitrary - they are predictable, and often preventable.
“Health insurance claims don't get rejected out of nowhere — there is almost always a clear reason behind it, and in most cases, that reason was avoidable,” said Nochiketa Dixit, Managing Director – Industries at EDME Insurance Brokers Ltd.
He pointed to four recurring triggers:
- Non-disclosure of pre-existing illnesses
- Seeking treatment during the waiting period
- Undergoing procedures not covered under the policy
- Filing claims with incomplete documentation
“These are not minor errors; insurers are well within their rights to deny a claim on any of these grounds,” Dixit added.
Chetan Vasudeva, Senior Vice President – Business Development at Elephant.in, Alliance Insurance Brokers, echoed this view, linking rejections largely to gaps in awareness and compliance.
“There are various reasons why health insurance claims may be denied or rejected, mainly because of ignorance on the part of individuals or procedural problems,” Vasudeva said.
He highlighted that concealment or misrepresentation at the time of purchase, especially around pre-existing conditions, remains a leading cause. “Treatment that is not covered under an insurance plan or comes under waiting periods will lead to claim denials,” he noted.
Where Policyholders Slip
The problem often begins at the very first step: buying the policy.
Many consumers fail to disclose full medical histories, either to lower premiums or due to lack of awareness. Others don’t fully understand exclusions, sub-limits, or waiting periods—details that later become grounds for rejection.
Equally critical is the claims process itself.
“Incomplete or inaccurate information provided at the time of claim filing” can lead to denial, Vasudeva said, adding that missing hospital bills, prescriptions, discharge summaries, or delayed submission of documents are common pitfalls.
Operational issues also play a role. For instance, opting for treatment at a non-network hospital while expecting a cashless claim, or cases where insurers find “insufficient medical justification,” can impact approvals.
The Prevention Playbook
The reassuring part: most of these issues can be avoided with basic diligence.
Dixit stressed the importance of transparency at the outset. “Be upfront about your health history at the time of buying a policy,” he said. He also advised policyholders to understand waiting periods carefully, noting that “most pre-existing conditions require a 2 to 4 year wait.”
For planned hospitalisations, prior approval from the insurer is critical. Equally important is documentation - keeping all medical records, including bills, prescriptions, test reports, and discharge summaries, in order.
Perhaps the most overlooked step is also the simplest.
“Most people look at their policy document only after a claim gets rejected. That is the wrong time,” Dixit said. “Read it on the day you buy it — know what is covered, what is not, and how the claim process works.”
Vasudeva reinforced this, advising consumers to “carefully review policy terms such as coverage limits, exclusions, waiting periods, and claim procedures to avoid surprises during settlement.”
He also stressed discipline during claims: “All required documents, bills, and medical reports must be submitted accurately and within the insurer’s timelines to prevent delays or rejection.”
A Shared Responsibility
The rising volume of complaints and claim disputes suggests that trust in the system is under strain. But the industry maintains that the burden is not one-sided.
“A rejected claim is rarely the insurer's fault alone,” Dixit said. “More often, it is the result of a policy bought without fully understanding what it covers.”
In other words, the gap between expectation and reality in health insurance is not just about denial rates - it is about awareness. And closing that gap may be the simplest way to ensure that when the safety net is needed, it actually works.
