This article is based on a real-life experience of my client, Rajesh. He had a 21-month-old health insurance policy from an Insurer for the Sum Insured of ₹ 10 lakhs with good comprehensive features.
About the author: Shashi Singh is a fee-only SEBI-registered investment advisor. He can be contacted via his website finmyn.com. Shashi is part of the freefincal list of fee-only advisors and fee-only India.
Rajesh had returned from a domestic trip and fell ill with a fever. He visited his family doctors. All reports looked normal. Since the fever was not coming down, he visited a hospital on 28th Nov 2022. The doctor admitted him to the hospital to manage and treat his symptoms. The doctors could not diagnose the reason for the disease, but he recovered with the anti-malarial treatment in five days.
During his treatment, Rajesh submitted a request for cashless claims processing, which was denied on 1st Dec 22, citing that “Exact duration/Chronicity of illness cannot be ascertained at this juncture. In-depth verification is required to ascertain the admissibility.” His hospitalization cost totalled ₹ 2.48 lakhs. He was forced to pay that amount from his pocket.
Claims Processing – Step 1
After his return home, Rajesh submitted a claim of ₹ 2.48 lakhs to the Insurer. Subsequently, a representative from the third-party company visited Rajesh’s home to verify the documents. He wanted to see Rajesh’s Google Maps timeline to validate whether Rajesh was admitted to the hospital. His approach appeared invasive and questionable. He was trying to find a reason to reject the claim. On 19th Jan 2023, Rajesh received an email rejecting his claim, stating that “the patient was admitted primarily for diagnostic and evaluation purposes. Therefore, we regret the claim is not payable policy clause 6.1.”
In the meantime, Rajesh reached out to his doctor to draft a letter on his behalf and send it directly to the Insurer. The letter highlighted that the reason the Insurer has used to reject the claim contradicts the reason mentioned in the discharge summary. The doctor did not receive any response from the Insurer.
Claims Processing – Step 2
Rajesh contacted the hospital for additional relevant documents, including internal case notes. He emailed the Insurer’s GRO (Grievance Redressal Officer) all the relevant documents to reconsider the rejection. On 9th Feb 23, he received an email rejecting his request stating the reason: “Claim stands rejected under admission for investigation and evaluation or misrepresentation of facts found during claim investigation”. There was no description of what misrepresentation is being talked about. Rajesh was hurt that his integrity was being questioned despite his being a loyal customer of the Insurer for a long time. He was even more determined to pursue the claim further.
Claims Processing – Step 3
Rajesh complained to the IRDA (Insurance Regulatory and Development Authority) portal Bima Bharosa on 14th Feb 2023. On 22nd Feb 2023, he received a rejection letter from the Insurer stating the reason “repudiation of the claim under policy clause 6.1” and “misrepresentations of facts were evident between the hospitals and insured with claim documents”.
Claims Processing – Step 4
Based on the advice of his agent and point of contact at the Insurer, Rajesh resubmitted the claim with the Insurer, hoping that a peer review of the claim by another claim processor at the Insurer may turn the decision in his favour. He received a rejection email on 3rd April 2023 stating, “The Medical Team reviewed the request for reconsideration of claim, and we would like to inform you that our earlier decision of not paying the claim, as per the T&C, will remain unchanged.”
Rajesh became occupied in the subsequent few months and could not actively pursue the claim.
Claims Processing – Step 5
Based on the advice from another agent, Rajesh resubmitted a request to the Insurer’s GRO. That request was again rejected on 8th Aug 23, citing that “As per submitted documents, the patient was admitted primarily for diagnostic and evaluation purposes. Therefore, we regret the claim is not payable policy clause 6.1. The patient’s vitals were stable during the hospitalization except few spikes; hence, the hospitalization was also not justified.”
Claims Processing – Step 6
Rajesh then registered a complaint with the local Insurance Ombudsman online. He updated the complaint with details, including the chronology of events, policy soft copy, treatment papers (e.g. discharge summary, doctor recommendation) and all communications with the Insurer. A hearing date for the case was scheduled for 19th Sept 2023. However, on 14th Sept 2023, just before the hearing, Rajesh received an email from the Ombudsman stating that the insurer had requested an unconditional settlement of the full amount.
The email came as a bittersweet surprise for Rajesh. The ten months of challenging and emotionally draining process has left him in bad taste.
Points to Ponder
Rajesh was wondering
- Since the Insurer agreed to the complete settlement without any hearing, the Insurer never had a conviction based on the claim’s rejection. Then why was the claim rejected multiple times by multiple people at the Insurer? Is this a systemic failure?
- Why did the Insurer go to the extent of using the word “misrepresentation of facts” when there was no misrepresentation? Is the Insurer culture encouraging pushback using accusative communication?
- Was the pushback from the Insurer to test the patience of the policyholder and see if the policyholder would give up at some point of time in the claim processing process? Is IRDA aware of how many policyholders with legitimate claims are dropping out in the claims processing process, and if yes, what can they do to improve the process?
- Is this Standard Operating Procedure (SOP) blessed by the CEO and Claims Head of the Insurer?
- How is IRDA using Ombudsman case data to change the Insurer’s behaviour? How is the Insurer being penalized for consistently rejecting claims where the final settlement favours the client?
Opportunities for Improvement
Rajesh wished to address the following operational challenges in the claims processing.
- The claim process wasn’t clearly defined from the outset. For instance, after a claim rejection, the policyholder must reach out to the GRO of the insurance company and await a response for 7 days. If unsatisfied, one can approach IRDA, redirecting the complaint to the insurance company’s GRO for another review. If the Insured is still unsatisfied, he can contact the insurance ombudsman.
- The ombudsman’s website was not fully operational (issues with OTP generation), requiring the use of emails for communication. This led to several exchanges to clarify certain aspects of the documentation.
All is Not Lost
While Rajesh is unhappy with the whole experience, he has some positive things to share
- He received unwavering support from his doctor, who was always ready to assist in all possible ways.
- The Insurance ombudsman process is streamlined. Rajesh was kept consistently informed via email and phone about the status of his complaint.
- Post-COVID, the insurance ombudsman process has moved online. This meant Rajesh didn’t have to submit documents physically or would have had to attend the hearing in person; it was all done remotely.
- Neeraj from InsureMart provided invaluable advice on how to present the case.
While this claim experience is negative, I am sure that there will be many policyholders who may have had good claims experience with the same insurer. I hope the Insurers will take these concerns seriously, reduce negative experiences and improve positive experiences. I sincerely hope that the IRDA will clamp on the Insurers who are intentionally rejecting genuine claims.
I sincerely thank my client, Rajesh, who provided all the necessary input to draft this blog.
Disclaimer: The content presented in this blog is provided for informational purposes only and should not be construed as a solicitation, recommendation, endorsement, or offer by the author. Should any doubts arise concerning the content’s suitability or accuracy, consulting an independent financial advisor for personalized guidance is strongly advised.
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Dr M. Pattabiraman(PhD) is the founder, managing editor and primary author of freefincal. He is an associate professor at the Indian Institute of Technology, Madras. He has over ten years of experience publishing news analysis, research and financial product development. Connect with him via Twitter or Linkedin, or YouTube. Pattabiraman has co-authored three print books: (1) You can be rich too with goal-based investing (CNBC TV18) for DIY investors. (2) Gamechanger for young earners. (3) Chinchu Gets a Superpower! for kids. He has also written seven other free e-books on various money management topics. He is a patron and co-founder of “Fee-only India,” an organisation promoting unbiased, commission-free investment advice.
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