Around 25% of health insurance claims are rejected because the insured had pre-existing conditions like diabetes or hypertension, which were not disclosed at the time of purchase. Another 25% of claims rejections are because policyholders were unaware of the terms of cover and claimed for OPD(outpatient department) or other treatment excluded under the policy.A large chunk of claims (16%) are rejected because the claimant did not revert to queries.
PolicyBazaar, which has an insurance broking licence, analysed the data on two lakh health insurance claims between April to September 2023, of which 30,000 were rejected.
From the insured’s perspective, the worst damage to their financials is caused by claims rejected for non-disclosure. While an equal number of claims are turned down for being outside the scope of the policy, these are low-value claims, with the occasional claim being turned down for experimental procedures.
“While rejections due to the treatment being outside the scope of the policy are numerous, they are usually for low-value expenses. The insured file many claims out of ignorance. We have seen OPD claims and claims for spectacles, which are, of course, not covered,” said Amit Chhabra, chief business officer – health insurance, PolicyBazaar.
“Claims are sometimes rejected due to the non-disclosure of material facts. While distributors may sometimes overlook or fail to ensure disclosure, the insured, as a party to the contract, bears responsibility. It is crucial for insurance buyers not to gloss over the proposal form, as the insurer may reject claims even if the non-disclosure is unrelated to the ailment,” said Segar Sampathkumar, director of health at the General Insurance Council, which represents the industry.
According to Chhabra, most rejections are due to a lack of understanding of the policy. “Non-disclosure affects even those claims that are unrelated to the pre-existing condition. The biggest giveaway is the initial report that the doctor prepares on admission. During admission, the insured has no choice but to declare all existing conditions as the course of treatment depends on it,” said Chhabra. Insurance laws mandate that the insured disclose all facts that are material to the insurer’s decision to accept the proposal. So, even if non-disclosure is not material to the cause of hospitalisation, the insured can reject the claim.