India has seen a sharp rise in health insurance premiums post-pandemic, primarily driven by escalating treatment costs. Health insurance premiums are projected to increase by 10% to 15% for renewals in 2024, with some senior citizens facing a staggering 100% hike. In response to the spike, the Insurance Regulatory and Development Authority of India (IRDAI) stepped in January 2025, capping the premium hike for senior citizens to 10%. Meanwhile, policyholders are growing frustrated with the increasing rate of claim rejections.
A report by the Insurance Brokers Association of India (IBAI) for the year 2022–23 highlighted the alarming rate of claim rejections in the sector, revealing that over 50% of health insurance claims are being rejected. The report notes that out of 28 non-life insurers, 11 have a claim settlement ratio below 70%, with standalone health insurance companies, which primarily serve retail clients, performing the worst.
In a survey conducted by LocalCircles between June and December 2024, 50% of policyholders reported experiencing partial or total rejection of their claims. A staggering 95% of health insurance complaints relate to these claim denials. IBAI officials attribute this issue partly to the disparity in handling claims, where smaller claims are processed quickly, while larger ones face delays and hurdles, creating significant inconvenience for policyholders.
Why Are Claims Rejected?
The rising rejection rates are attributed to multiple factors, including the complexity of larger claims. Insurers tend to prioritize smaller claims to maintain a positive customer experience, but they often drag their feet on larger, more expensive claims. This delay creates frustration and dissatisfaction among policyholders.
Reducing Premiums
To counter the rising premiums, Amit Chhabra, Chief Business Officer at Policybazaar, suggests that customers can lower their premiums by opting for higher deductibles. For example, paying a larger portion of the medical expenses upfront (like Rs 15,000) could cut premiums by up to 15%. Another way to save is by choosing a health insurance plan with a limited network of hospitals, which can reduce premiums by as much as 15%. Insurance companies also offer discounts of 8% to 15% for those paying premiums in a lump sum for 2 or 3 years.
What To Do if Your Claim is Rejected?
Policyholders whose claims are rejected can address the issue by filing a complaint with the insurer’s Grievance Redressal Officer (GRO). Complaints can also be lodged on the IRDAI’s Insurance Bharosa portal. If the company fails to resolve the complaint within 30 days, the matter can be escalated to the Insurance Ombudsman. The Ombudsman aims to resolve complaints within a month, or up to three months, depending on the complexity of the case. If these measures fail, policyholders can approach the consumer court for further recourse.
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