May 03, 2024, New Delhi: The Department of Consumer Affairs earlier this year wrote to the Ministry of Finance that in view of the rising number of complaints of mis-selling of insurance policies, rules should be changed to ensure that insurance agents maintain an audio-visual record of their sales pitch. This is to ensure that the prospective buyers are made aware of all policy features and not just the positive points.

Almost one-third or 1.6 lakh cases out of total 5.5 lakh pending consumer complaints received by the department of consumer affairs are of the insurance sector, participants at a roundtable on Consumers and the Insurance Sector, organised last year, were told. Six major issues faced by policy holders include lack of full disclosure about exclusions and eligibility for claims in their policies; ambiguity in contracts due to use of technical jargons and complex words; claims rejected due to pre-existing disease; eligibility other than the pre-existing disease and crop insurance rules tied to the scheme. The Consumer Affairs Department has also shared concern on the fact that agents hardly take any interest to guide or help policyholders after selling policies as their commissions are front-loaded.

Despite some interventions by the Insurance Regulatory and Development Authority of India (IRDAI) consumers continue to grapple with insurance companies to get their health claims. One of the top issues that consumers have been regularly writing about on LocalCircles platform is rejection of health insurance claims including cancellation of policies by insurance companies. To understand how people buy general insurance, the kind of policies they buy and where they face most issues, LocalCircles conducted a national survey which received over 39,000 responses from citizens located in 302 districts of India. 67% respondents were men while 33% respondents were women. 46% respondents were from tier 1, 32% from tier 2 and 22% respondents were from tier 3, 4 and rural districts.

Of those who have general insurance policies, motor and health insurance top the list

The first question in the survey asked policyholders about the different types of general insurance policies they currently have. In response, 13% of policyholders said they have purchased “(1) health insurance”, 20% said “(2) motor insurance”, and 3% said “(3) home insurance”. Breaking down the poll, 45% said they currently have “1 & 2” types of general insurance policies; 1% have “2 & 3”; 2% have “1 & 3”; and 16% have all “1, 2 & 3” types of general insurance policies. On an aggregate basis, the survey indicates that 82% have “motor insurance”, 76% have “health insurance”, and only 22% have “home insurance”. The question in the survey received 9,410 responses.

54% of those who have a general insurance policy are now buying/renewing it online

The next question in the survey asked general insurance policyholders about how they or their family primarily went about purchasing or renewing their general insurance policies (health, motor, and home) in the last 12 months. In response, 14% said they “purchased/did renewal of the policy online via an aggregator website”; 40% said they did it “online via insurance provider’s website/app”; 39% said they did it via “an insurance agent;, and 5% “did it “via phone with the insurance provider”. There were also 1% who said they did not need to purchase/renew the policy themselves as their company/someone else does it for them;. 1% couldn’t say. On an aggregate basis, 54% of those who have a general insurance policy are now buying//renewing it online or via an agent. This question in the survey received 9,376 responses.

Among general insurance claims, Indians struggle the most when trying to get their health insurance claim processed

The next question in the survey asked, “With which general insurance policy have you had the most difficulty in getting an insurance claim processed in the last 3 years?” In response, 27% said “(1) health insurance”; 9% said “(2) motor insurance”; and 3% said “(3) home insurance”. A breakdown of data shows, 9% had difficulty in getting an insurance claim with “1 & 2” type of general insurance policies; 1% said “1 & 3”; 6% said “1, 2 & 3”. There were also 19% of general insurance policyholders who said they had no issues with any of the above as the claims were processed without hassle. Another 26% said they “did not have a need to file a general insurance claim in the last 3 years”. On an aggregate basis, of general insurance policyholders, 43% had difficulties processing their “health insurance” claims in the last 3 years; 24% had difficulties with “motor insurance”, and 10% with “home insurance”. This question in the survey received 9,021 responses.

Many policyholders cited their experience of getting a health insurance claim processed. Challenges faced ranged from insurance companies rejecting claims by classifying a health condition as a pre-existing condition to only approving a partial amount. According to majority of those who commented on the subject, the process of claiming health insurance is extremely time consuming with many policyholders and their family members literally spending the last day of their hospital admission running around trying to get their claim processed. In several cases cited by policy holders on LocalCircles, it took 10-12 hours after the patient was ready for discharge for them to actually get discharged because the health insurance claim was still getting processed. By the time the claim is approved, the patient is so tired that they have no energy to fight for any expenses that are disapproved by the insurance company. If they stay back at the hospital another day to do so, the cost of that additional night’s stay has to be borne by them. And according to several patients, this is the experience where the insurance company has already provided a pre-approval to the hospital’s TPA desk before admission of the patient.

93% of respondents indicated they favour IRDAI making it mandatory for insurance companies to publish details of total claims received, rejected, and also data about policies approved and policies cancelled on their websites each month

With one of the key concerns outlined by some health insurance policyholders being that the insurance companies tend to cancel policies during the claims process for reasons like pre-existing conditions, the survey next asked respondents, “Should the IRDAI (insurance regulator) make it mandatory for every insurance company to publish details on their website about total claims received, total claims rejected and approved as well as total policies cancelled each month to ensure effective claim processing?” The query received 11,318 responses with 93% indicating that they are in favour of IRDAI making it mandatory for insurance companies to disclose details of claims received, rejected, and data about policies approved and policies cancelled on their websites each month. Only 7% of the respondents indicated that “no” such step is necessary. People believe that such a disclosure will improve transparency of reporting and discourage insurance companies from not cancelling policies arbitrarily.

In summary, of those who own general insurance policies, motor and health insurances top the list, followed by home insurance. 54% of those who have a general insurance policy are now buying/renewing it online while 40% of them still go via an agent. Among general insurance claims, Indians struggle the most when trying to get their health insurance claim processed and 43% of them experienced this. The IRDAI, Health Ministry as well as the Consumer Affairs Ministry need to collaborate to ensure health insurance claims are processed fairly and fast and should not lead to harassment of the policy holder. Taking into account the difficulty faced in getting insurance claims processed, 93% of respondents indicated that they are in favour of IRDAI making it mandatory for insurance companies to disclose details of claims received, rejected, and also data about policies approved and policies cancelled on their websites each month. LocalCircles will share the findings of the survey with the IRDAI, Consumer and Health Ministry so that feedback of general insurance policyholders’ is taken into cognisance and appropriate interventions are done to address the issues.

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43% consumers faced problems in health insurance claims: LocalCircles SurveyMay 03, 2024Claim approval takes as many as 10-12 hours, claim rejection also rampant, says surveyhttps://indianexpress.com/article/business/43-consumers-faced-problems-in-health-insurance-claims-localcircles-survey-9304406/articleIE

Almost 43 pc health insurance policyholders struggled to get claims processed in last 3 yrs: Survey - ET HealthWorldMay 03, 2024"Despite some interventions by the Insurance Regulatory and Development Authority of India (Irdai) consumers continue to grapple with insurance companies to get their health claims," Localcircles said in a statement.https://health.economictimes.indiatimes.com/news/industry/almost-43-pc-health-insurance-policyholders-struggled-to-get-claims-processed-in-last-3-yrs-survey/109799371?utm_source=whatsapp_web&utm_medium=social&utm_campaign=socialsharebuttonsarticleET

Health claims: 43% struggle, many forced to stay extra day at hospitalMay 03, 2024One of the top issues that consumers have been regularly writing about on LocalCircles is that of rejection of health insurance claims including cancellation of policies by insurance companieshttps://www.business-standard.com/finance/personal-finance/health-claims-43-struggle-many-forced-to-stay-extra-day-at-hospital-124050300176_1.htmlarticleBS

Health insurance: More than 40% policyholders struggle with claims, finds surveyMay 03, 2024As per the survey, 43% of insurance policyholders who submitted claims in the past 3 years faced problems with receiving their money or settling hospital bills after their treatment.https://www.indiatoday.in/business/story/health-insurance-claims-more-than-40-per-cent-policyholders-struggle-survey-2534741-2024-05-03articleIT

43% Health Insurance Policyholders Face Issues In Disbursal Of Claims: Survey - News18May 03, 2024The survey highlighted challenges such as claim denials, partial payments and prolonged settlement durations.https://www.news18.com/business/43-health-insurance-policyholders-face-issues-in-disbursal-of-claims-survey-8876313.htmlarticleNews18

Insurance: 93% policyholders want cos to publish monthly claim settlement dataMay 05, 2024A vast majority of insurance policyholders want each insurance company to publish the number of total claims received, approved and rejected on their official websites every month, revealed LocalCircles survey.https://www.livemint.com/insurance/insurance-93-policyholders-want-companies-to-publish-monthly-claim-settlement-numbers-on-websites-health-insurance/11714842880881.htmlarticleLiveMint

Health Insurance Claim: 43% policyholders faced difficulties, some had to wait an extra day at hospital, surveyMay 08, 2024Health Insurance claim: Many people in India are facing difficulties in getting their health insurance claim processed. "43% health insurance policyholders who filed a claim in the last three years struggled with getting it processed," as per a report by LocalCircles. https://economictimes.indiatimes.com/wealth/personal-finance-news/heath-insurance-claim-43-policyholders-faced-difficulties-some-had-to-wait-an-extra-day-at-hospital-survey/articleshow/109789790.cms?from=mdrarticleET

Health insurance: IRDAI sets 3-hour time limit to clear cashless claims. Details hereMay 30, 2024Health insurance: The IRDAI said that in emergency cases, the insurer should decide on the request for cashless authorisation immediately. Details herehttps://www.hindustantimes.com/business/health-insurance-irdai-sets-3-hour-time-limit-to-clear-cashless-claims-details-here-101717035221723.htmlarticleHT