Insurance claims are meant to offer financial protection when life throws unexpected challenges. However, for many policyholders, the claims process can be fraught with obstacles.

From claim rejections to disputes, the road to a successful claim settlement can seem unclear and frustrating.

A recent survey conducted by LocalCircles and the Insurance Regulatory and Development Authority of India (IRDAI) stresses the growing concern around health insurance claims in India.

Experts from the insurance industry shed light on the common reasons behind these hurdles and discuss the  steps both insurers and policyholders are taking to enhance transparency, prevent fraud, and ensure smoother claims processing.

Reasons for claim rejections and how to avoid them

Ashish Yadav, Head of Products at ManipalCigna Health Insurance, emphasises that failure to disclose pre-existing conditions is one of the most common causes of claim rejections.

"Policyholders must fully disclose their medical history when acquiring a policy," Yadav advises. "Rejections also arise when claims are submitted outside the scope of coverage or before the waiting period ends."

SK Raghav, Managing Director of Lords Mark Insurance Broking Services, agrees, adding that misrepresentation of facts, non-disclosure, and improper coverage are frequent pitfalls.

He warns, "To avoid these issues, always disclose all facts accurately, choose a knowledgeable broker, and ensure your policy covers all relevant risks."

Another common reason for claim denial is the non-disclosure or misunderstanding of pre-existing conditions.

Moreover, if the insurance policy is not active at the time of claim filing due to non-payment of premiums or failure to renew on time, insurers may reject claims.

Increasing disputes over claim denials

The rise in claim disputes is a growing concern in the insurance industry. Raghav points out that frequent rejections erode trust and financial stability for policyholders.

"Unjustified claim denials and inflated medical costs are some of the primary concerns leading to disputes," he says. "We need stricter regulations to curb overbilling practices and improve transparency."

Yadav acknowledges that disputes often stem from misunderstandings about policy coverage, exclusions, and documentation requirements.

Enhancing transparency in the claims process 

To combat these challenges, insurers are turning to digital tools to streamline and enhance transparency.

Yadav shares that ManipalCigna Health Insurance has focused on providing clear, concise policy terms and using digital tools to expedite processing and communication.

Raghav explains how digital platforms are transforming claim processing. "Digitisation allows policyholders to track claims in real time, cutting down manual intervention and providing instant updates."

Sandeep Dadia, CEO of Lockton India, further emphasises the role of digital innovation in boosting transparency.

"Real-time claim tracking systems, AI-powered claim assessments, and clear communication protocols are helping to provide policyholders with better clarity throughout the process," he points out
Dhirendra Mahyavanshi, Co-Founder and CEO of Turtlemint, adds insurers are focusing on the IRDAI mandated ‘Customer Information Sheets’ (CIS) to simplify policy terms, reducing misunderstandings that lead to claim disputes.
"Last year, the government also introduced cashless claim settlements across the country, making healthcare services more accessible and cost-effective. Furthermore, regulatory changes such as the National Health Claims Exchange aim to simplify the claims process, leveraging digital platforms to ensure smoother and more efficient claim settlements," he says.

Efforts toward standardising documentation and approval processes

In line with these advancements, industry bodies and regulators are working to standardise claim documentation and approval processes 

Dadia notes that IRDAI has introduced initiatives like common claim forms to simplify settlement procedures.

Balancing fraud prevention

Preventing fraud while ensuring legitimate claims are processed without delay is a delicate balance

Yadav explains that insurers are using AI and advanced analytics to detect fraudulent claims while safeguarding genuine cases.

Additionally, educating policyholders about proper documentation is crucial in preventing fraud.