Understanding Claims Metrics
When evaluating a health insurer's performance, two crucial metrics stand out: the Claim Paid Ratio and the Incurred Claims Ratio (ICR). The Claim Paid Ratio offers
a snapshot of how many claims an insurer successfully settles within a specified timeframe, typically three months. For the fiscal year 2024–25, Star Health reported an impressive Claim Paid Ratio of 99.81%, indicating that the vast majority of claims were processed efficiently. However, this figure places them slightly behind some competitors who achieved or neared 100%. The ICR, on the other hand, provides a deeper insight into the insurer's financial health by revealing the proportion of earned premiums that are actually disbursed as claims. In FY2023–24, Star Health's ICR was 66.47%, which saw an increase to 70.3% in FY2024–25. While this upward trend suggests a greater portion of premium income is being allocated to claim settlements, it's noteworthy that many other insurers maintain even higher ICRs, paying out a larger percentage of their premiums to policyholders.
A Contentious Claim Denial
A recent incident involving Star Health & Allied Insurance in Lucknow has brought the issue of claim denials to the forefront, igniting a debate about trust within the health insurance sector. A policyholder, who had diligently paid an annual premium of Rs 50,000 for his mother's health insurance policy, faced a claim rejection when she required medical attention. The policyholder publicly shared his disappointment, alleging a prolonged wait and an indifferent response from the insurer's representative. This situation was amplified when it was highlighted on social media by a notable figure, drawing widespread attention and prompting many others to share their own challenging experiences with insurers. The core of the denial, as stated by the insurer, was 'material non-disclosure,' a common reason cited when an insurer believes critical information was withheld at the time of policy application.
Insurer's Stance Explained
Star Health has provided a clear explanation for the claim rejection, emphasizing that all decisions are rigorously based on documented evidence and thorough verification processes. The company asserts that when material non-disclosure is identified during the claim assessment, they are obligated by policy terms and regulatory guidelines to act accordingly. They also highlighted that these decisions undergo defined review and grievance procedures to ensure fairness and accountability. In the specific Lucknow case, Star Health stated that the claim denial was due to the potential existence of a pre-existing medical condition that was relevant to the claim, and for which supporting documentation was requested but not provided by the policyholder despite follow-ups. The company maintains that its decision was in strict adherence to the policy's terms and conditions and is fully substantiated by documentary evidence. However, for policyholders, the lack of transparency surrounding such complex decisions can often foster a sense of mistrust.
Complaint Landscape Analysis
To further gauge an insurer's standing, examining complaint numbers offers valuable perspective. According to data from the IRDAI Handbook of Indian Insurance Statistics for 2024–25, Star Health & Allied Insurance Co. Ltd. received a total of 12,186 complaints during the fiscal year, encompassing both previously pending and newly lodged grievances. For comparative context, CARE Health Insurance recorded 4,423 complaints, and Niva Bupa Health Insurance received 3,983. While raw complaint figures can be informative, they don't always paint the full picture, especially for insurers with extensive customer bases. A more refined indicator is the number of complaints lodged with the Insurance Ombudsman per lakh policyholders. Data from the Council of Insurance Ombudsman's Annual Report 2024–25 and the IRDAI Handbook reveals that for Star Health, with approximately 23,780 '000s policyholders, the rate of complaints received by the Insurance Ombudsman stands at 51 per lakh policyholders, providing a more standardized measure of customer grievances relative to their market size.
