Explainer: Why policyholders are unhappy with insurance companies, what to do if claim is rejected?

New Delhi. There has been an increase of about 34 percent in health insurance complaints of policyholders in 2021-22 as compared to the previous year. Figures released by the Office of the Insurance Ombudsman in Mumbai tell this picture. This insurance center handled 2,298 health insurance complaints in 2019-20 and 2,448 in 2020-21, but according to the annual report for 2021-22, this figure increased to 3,276 in 2021-22.

However, the report does not differentiate between Covid-19 and non-Covid-19 claims. The spike in complaints came during a period when Mumbai and the country faced waves of the Delta and Omicron variants of the corona.

In a media conference held recently, Mumbai and Goa Insurance Ombudsman Bharatkumar Pandya said, “Most of the complaints related to COVID-19 are related to partial settlement of hospitalization claims. Then there are cases where claims were rejected outright on the ground that the patient does not require hospitalization.”

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policy contract vs government tariff
One of the reasons for partial settlement of hospitalization claims due to COVID-19 was that many insurers chose to go by the treatment charges prescribed by the State Governments and the General Insurance Council.

Pandya explains, “We pass judgment after examining each case individually. Normally, however, the insurer has to go through the terms and conditions of the policy and these tariffs do not form part of the policy documents. In some cases, rate cards set by the government did not apply to insured patients.”

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Hospitals’ view that the government-imposed COVID-19 tariffs were only for uninsured patients resulted in a standoff between hospitals and insurers. Due to this the policyholder patients got in trouble. The reference rates published by the GI Council were also indicative and it was not mandatory for insurers to follow them.

Policy conditions are also the reason
Another common cause of disputes between policyholders and insurers are claims made during the waiting period. For example, most health policies do not cover expenses incurred on cataract or hernia treatment in the first policy year.

The Mumbai center’s report also points to resiliency clauses in health insurance contracts, which reduce reimbursement, as a major cause of disputes.

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The report says that the mention of the Customary and Reasonableness Clause in relation to treatment in a network hospital is both unfair and counter-intuitive. Why would the insurer not raise the issue of ‘over-charging’ with the hospital and pay the insured?

Knock the doors of Insurance Ombudsman for complaints
The rejection of your insurance claim by the insurance company cannot be the final decision. The roads ahead are also open for you. You can lodge a complaint with the IRDAI and Insurance Ombudsman offices in your city. The Lokpal offices handle complaints involving claims up to Rs 30 lakh.

After the complaint, the Insurance Ombudsman passes the order after examining the arguments of both the parties. If you are not satisfied with the decision, you are free to approach the consumer courts. However, this order is binding on the insurance companies.

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