The promise of health insurance providing financial and emotional security in medical emergencies is increasingly under question in India. Many policyholders who believed they had peace of mind now find themselves tangled in paperwork, claim denials, and long delays when they seek help.
One such case: a 24-year-old in Mumbai, admitted with high fever and treated for nearly ten days — only to see his claim rejected on grounds of “unwarranted hospitalisation,” despite a doctor’s certificate. Even after repeated documentation and intervention by the insurance ombudsman, the rejection forced a protracted fight before he finally received the payout.
This story echoes across many similar cases. According to recent data, insurers denied claims totalling roughly Rs. 15,100 crore in FY24 — around 13 per cent of all claims. Claim repudiations rose nearly 19 per cent year-on-year.
The problems are particularly acute with “cashless claims”: many hospitals have withdrawn or suspended cashless services for policy-holders of certain insurers, citing delayed reimbursements or low tariffs. This has forced patients to pay upfront, defeating the purpose of cashless coverage.
Insurers defend their actions, asserting that many rejections stem from non-disclosure of pre-existing conditions, incomplete documentation, or attempts to prevent fraud. They argue that these measures are necessary to ensure sustainability and fairness, given rising medical costs.
Meanwhile trust in health insurance is eroding. Many policy-holders — especially younger people and first-time buyers — report disillusionment, citing poor clarity of policy terms, unclear processes, and fear of rejection when it matters most.
On the positive side, the industry is trying to reform: regulators have mandated faster claim processing, insurers have done away with upfront GST on health policies — which has boosted demand — and digital claim-filing has improved for many. But much remains to be done if health cover is to truly deliver on its promise of protection instead of adding stress in crises.
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