Zerodha co-founder Nithin Kamath recently highlighted a critical issue on the challenges of processing insurance claims. He emphasized, “Just because you have insurance doesn’t mean all your claims will be processed or paid in full.” This statement sheds light on the complex realities of insurance claim processing and the reasons behind claim denials.
Key Insights from Kamath’s Post
- Common Reasons for Claim Denials:
- Non-Admissible Claims (31%): Often rejected due to issues such as waiting periods not being completed.
- Non-Coverage Reasons (28%): Include unnecessary hospitalizations or exclusions under the policy terms.
- Insurer Delays (8%): Prolong claim processing timelines.
- Fraudulent Claims: Cases where claims lack authenticity or sufficient evidence.
- Claim Settlement Ratio (CSR):
CSR is a critical metric to assess the reliability of insurers in settling claims:- Stellar CSR (>90%): HDFC ERGO leads with a 98% settlement rate, followed closely by Digit and SBI General at 97%.
- Industry Average: 85%. Policies below this benchmark are often categorized as “no-go” for consumers.
Rising Health Insurance Claims in India
Health insurance claims have surged by 30% in the past three years due to increasing healthcare costs and the prevalence of chronic conditions like:
- Heart disease
- Diabetes
- Cancer
The average claim payout grew from ₹62,014 in FY23 to ₹81,025 in FY25, adding strain to family finances and emphasizing the importance of comprehensive insurance coverage.
How to Avoid Claim Denials
- Understand Policy Terms:
- Be aware of waiting periods for specific treatments or diseases.
- Identify coverage exclusions and limitations upfront.
- Maintain Accurate Documentation:
- Ensure all required documents are submitted, complete, and accurate.
- Choose Policies with Riders:
- Opt for critical illness or accidental death benefits for expanded protection.
- Evaluate Insurers Carefully:
- Select insurers with high CSRs to minimize the risk of claim rejections.
- Monitor Hospitalization Practices:
- Avoid unnecessary hospitalizations or treatments that may trigger non-admissible claims.
Conclusion
While health insurance is a vital financial tool, understanding the intricacies of your policy and being proactive about claim processes is equally important. Consumers are encouraged to research thoroughly, select policies wisely, and stay informed about their rights and responsibilities to maximize the benefits of insurance and safeguard against financial uncertainties.
