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Non Life Insurance - Health insurance claim settlement goes fast track

07 Nov 2012

Eight major general insurers settled 80% of their total claims during July 2011–June 2012 period Health insurance has become an essential financial tool for every household due to increasing awareness and rising medical cost. Non-life insurance companies are witnessing around 25–30 per cent growth in the health insurance segment on an annual basis.

However, the actual moment of truth for a policyholder is at the time of registering a claim. If the claims are not met efficiently and promptly, then the very purpose of seeking insurance protection against an unfortunate health exigency is defeated for policyholders. An analysis by Financial Chronicle Research Bureau of eight large general insurance companies revealed that collectively they settled 79.5 per cent of their total claims during July 2011–June 2012 period.

The total claims consisted of pending claims from previous quarter and new claims registered by policyholders during the period. These insurers had received total 81,42,971 claims, out of which, 75,86,255 claims were intimated during July 2011–June 2012 period.

Out of the total claims, insurers either settled or closed 64,75,765 claims. The insurers that were considered for the analysis are The Oriental Insurance, United India Insurance, ICICI Lombard General Insurance, Star Health and Allied Insurance, Reliance General Insurance, Bajaj Allianz General Insurance, Cholamandalam MS General Insurance and HDFC Ergo General Insurance. Among these insurers, The Oriental Insurance has settled highest claims as a proportion of the total claims.

They settled 96 per cent or 2,90,751 claims out of their total 3,02,855 claims registered. Bajaj Allianz settled 91 per cent or 94,276 claims out of their total 1,03,747 claims. United India settled 85 per cent or 10,83,173 claims out of their total 12,67,565 claims. On the other hand, Reliance General Insurance settled 69 per cent or 4,70,653 claims out of their total 6,85,972 claims, while HDFC Ergo settled 73 per cent or 52,165 claims out of their total 71,278 claims. ICICI Lombard settled 78 per cent or 38,78,482 claims out of their total 49,80,906 claims. However, more important aspect of claims is the ones being repudiated by insurers.

The total number of claims been repudiated by these eight insurers were 1,83,010, which is 2.2 per cent of the total claims. HDFC Ergo repudiated highest claims as a proportion of the total claims received. They repudiated 16.8 per cent or 12,004 claims out of total 71,278 claims. Star Health repudiated 6.7 per cent or 37,593 claims out of their total 5,64,886 claims. Cholamandalam MS repudiated 6.3 per cent or 10,369 claims out of their total 1,65,762 claims. Oriental Insurance repudiated lowest number of claims as a proportion of total claims. They repudiated 0.2 per cent or 525 claims out of their total 3,02,855 claims. Reliance General repudiated 0.6 per cent or 4,269 claims out of their total 6,85,972. United India repudiated 1.6 per cent or 20,816 claims out of their total 12,67,565 claims.

“A claim is generally repudiated if it is not payable as per the terms of the policy or there has been some misrepresentation by the policyholder. We have even set up a separate department to check frauds because we had been experiencing increase in fraudulent practice,” said Suresh Sugathan, head of health administration team at Bajaj Allianz General Insurance. While rejecting a claim, insurers must explain in writing about the specific causes due to which the claim is being rejected.

As per insurance experts, claim are mainly rejected when the policyholder registers a claim due to some pre-existing disease or hospitalisation is not for 24 hours. Submission of incomplete documents or delay in document submission is another cause for repudiation of claims. As per the guidelines prescribed by the Insurance Regulatory and Development Authority (Irda), insurance company must inform the policyholder about any pending document within 15 days of claim intimation.

Also, insurers have to inform the policyholder properly about required documents and not ask for documents in a phased manner. Claims kept pending are another aspect of insurance claims registered by policyholders. Reliance General has the highest claims pending as a proportion of the total claims. They have 31 per cent or 2,12,392 claims pending at the end of June quarter, out of the total 6,85,972 claims at the end of July 2011–June 2012 period.

“A huge portion of our outstanding claims are from a government-sponsored scheme for artisans, where the claimant has already received the service but the claims are due towards medical centres. These claims are settled once every month but are kept on books,” said Rakesh Jain, chief executive officer of Reliance General Insurance. ICICI Lombard has 20 per cent or 10,10,602 claims pending out of the total of 49,80,906 claims.

“Our pending cases are sequentially coming down over the past few quarters. A good number of claims are pending towards state-run health schemes, which generally take significant amount of time to get settled,” said Sanjay Datta, head of underwriting and claims at ICICI Lombard General Insurance. Cholamandalam MS has 15 per cent or 24,835 claims pending out of the total 1,65,762 claims. On the other hand, Oriental Insurance has 2.7 per cent or 8,118 claims pending out of the total claims, while Bajaj Allianz has 3.7 per cent or 3,859 claims pending out of total 1,03,747 claims. Star Health and Allied Insurance has 9 per cent or 51,544 claims pending out of total 5,64,886 claims.