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Non Life Insurance - Did your insurer pay up for that costly surgery?

16 Dec 2019

Given the bad quality of the air we inhale, the water we drink and the food we eat, health issues and diseases are on the rise. Having a health plan with an adequate cover is becoming more important than ever as hospital bills can easily derail your finances. But imagine buying a suitable health policy, paying the premiums regularly and still having your claim rejected at the last moment. To avoid such a situation, it’s important to consider the claims settlement ratio of an insurer, apart from a plan’s features and premiums. A higher claims settlement ratio denotes that the insurer has paid a higher percentage of the claims raised by its policyholders. To give you a ready comparison, we have designed Mint SecureNow Mediclaim Ratings (MSMR).

However, it’s also important to understand that your job doesn’t end at selecting the insurer with the highest claims ratio. Your health insurer can reject your claim for various reasons. We tell you some of the common reasons behind the rejection of claims and when you can make a request for reconsideration.

Rejection of claims

The reasons range from filling in incorrect details to hiding pre-existing health conditions to not following the claim procedure correctly.

It is important to take the utmost care when filling in your form and not let an agent do the work on your behalf. “Many people fill inaccurate or wrong details in the health insurance application form, leading to a claim rejection. Wrong information, especially with regard to medical history, leads to claim rejection. The main reason for this is insurance agents filling wrong details deliberately—they mention that you are healthy so that you can get lower premiums. When the insurer gets to know this, the claim gets rejected," said C.S. Sudheer, CEO and founder, IndianMoney.com, a personal finance education company.

While hiding some information may help you get a policy or a lower premium, remember that it can cost you later in the form of claim rejection. “Hiding pre-existing diseases is a common reason for health insurance claim rejection. Also, if you make a claim against an exclusion, it is bound to get rejected," said Sudheer. Exclusions are conditions that are not paid for by the insurer; these could be pre-existing ailments, waiting period on certain ailments or permanent exclusions on certain procedures or treatments.

Pre-existing diseases, as the name suggests, are illnesses you may already have before buying the policy. Waiting period is a time specified by the insurer during which certain conditions are not covered by the policy. For instance, in the first 30-90 days of buying a policy, most insurers provide a cover only in case of accidental hospitalization; they, typically, do not entertain claims due to an illness in this period. Also, there are various diseases and ailments which are not covered for a specific period after a policy is bought. Insurers usually specify this period beforehand. Then there are certain ailments, such as Alzheimer’s, Parkinson’s, epilepsy, HIV/AIDS and so on, which are not covered by a policy at all and are, hence, permanently excluded from the scope of a policy.

Also, “if you don’t inform the insurer within 24 or 48 hours of hospitalization, the claim could get rejected," added Sudheer. Normally, during a cashless claim, you have to inform the insurer at the time of hospitalization or before that. In case of a reimbursement policy, where you pay the bills and get them reimbursed later, if you are delinquent in intimating your insurer within the specified time, your claim could get rejected. Ideally, “you should inform the insurer about a planned hospitalization at least 3-4 days in advance. If it’s an emergency, intimation must be done within 24 hours," said Sudheer.

In some cases, absence of proper documents may also result in claim rejection. Keep in mind that insurers may ask for original documents—be it the doctor’s prescription, medical reports or bills.

“Claims can also get rejected because of proximate clause. For instance, consider the case of a pregnant woman having fever and cold. As a precaution, doctors may advise her to get admitted, but had she not been pregnant, the doctor would not have advised hospitalization. In such cases, the insurer may decline to pay a claim if the policy does not cover pregnancy," said Mahavir Chopra, director of health, life and travel insurance, Coverfox.com, an online aggregator of financial products.

Also, in case a person is under the influence of alcohol at the time of an accident, the insurer may refuse to pay for hospitalization expenses, added Chopra.

Remember that sometimes when the insurer rejects a claim, it also terminates the policy simultaneously. “In cases where claim gets rejected because of non-disclosure or misrepresentation of facts, the insurer may also terminate your policy. However, it depends on the discretion of the insurer," said Chopra.

Request to reconsider

In some cases, you can request the insurer to reconsider your claim. “The health insurer could reconsider the claim if you can convince them that the claim is genuine," said Sudheer.

Start with understanding why the claim was rejected in the first place. “Go through the health insurance claim form submitted to the insurer and check the name and policy number. If there are errors, ask the TPA (third-party administrator) to reopen the case and inform the insurer. Claims get rejected due to system errors. The TPA representative can help you there. Record conversation and any documents if possible. Check documents sent with the claim form for mistakes and incorrect documentation or lack of attestation. A common reason for claim rejection is medical procedures deemed unnecessary. Get an opinion by a licensed medical practitioner to prove your claim in such cases," said Sudheer.

Once you have all the clarifications and supporting documents, write a request letter to the insurer to reconsider the claim. If you do not get a proper response, you can escalate the request to the company’s internal grievance redressal mechanism and the Integrated Grievance Management System, set up by the Insurance Regulatory and Development Authority of India.

In case you think the resolution is unfair, the next step is to approach the insurance ombudsman. The ombudsman is required to pass an order within 90 days of receiving a complaint, and its decision is binding on the insurer but not on you, the policyholder. If the order is in your favour, think carefully about whether you want to continue with the same insurer or not. “If you think it is not suitable, port to another insurer," said Chopra.

If you are not satisfied with the ombudsman’s decision, you can move the court.

It’s advisable to go through all the terms and conditions, including the exclusions and waiting periods, carefully when buying a health insurance policy. If you are thorough in your research, you wouldn’t have to worry about claim rejection.