Nearly one in every 12 claims was repudiated in FY25. Now, the Insurance Regulatory and Development Authority of India (IRDAI) wants insurers to explain those decisions more clearly.
Under the regulator’s latest reforms, insurers are expected to provide detailed reasons for claim rejections and cite the specific policy clauses on which those decisions are based. The move comes as claim-related grievances continue to rise despite improvements in claim-processing timelines.
According to IRDAI’s Annual Report 2024-25, insurers processed 3.26 crore health insurance claims and paid out ₹94,248 crore during the year. However, around 8% of claims were repudiated, meaning nearly one in every 12 policyholders who filed a claim did not receive a payout.
Consumer dissatisfaction is also rising. Grievances registered on IRDAI’s Bima Bharosa platform rose 41% year-on-year to 1.37 lakh in FY25 from 97,503 in FY24, according to data cited by NDTV. Nearly 70% of complaints in the health and general insurance segment were linked to , delays, partial payments or documentation disputes.
The numbers suggest that while insurers have become faster at processing claims, disputes around claim outcomes remain a key pain point.
A claims problem that timelines can’t fix
Health insurance disputes often arise from waiting periods, exclusions, room-rent limits, sub-limits, co-payment clauses and disclosure-related issues. Customers frequently discover these restrictions only when they file a claim.
This has widened the gap between what policyholders expect their insurance to cover and what insurers ultimately pay.
The issue is becoming more pronounced as healthcare costs rise. According to Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), the average health claim paid in FY25 stood at ₹28,910, even as medical inflation continues to push hospital bills higher, as reported by NDTV.
For many policyholders, the problem is not limited to outright claim rejection. A growing number of disputes involve partial settlements, where claims are approved but deductions are made because of exclusions, sub-limits, non-medical expenses or other policy conditions.
While insurers classify these as settled claims, customers often see them differently, particularly when a significant portion of the hospital bill remains unpaid.
That is one reason grievance levels have remained elevated despite regulatory efforts to improve claim processing.
Making rejections easier to challenge
IRDAI’s latest requirement seeks to address one of the most common frustrations in the claims process: lack of clarity.
By requiring insurers to explain claim denials and identify the relevant policy clauses, the regulator is attempting to make claim decisions more transparent and easier to scrutinise.
For policyholders, this could make it easier to assess whether a rejection is justified and pursue the matter throughchannels or the insurance ombudsman where necessary.
The reform builds on a broader set of claims-related measures introduced by the regulator. Insurers are now required to process cashless pre-authorisation requests within one hour and communicate discharge decisions within three hours of receiving the final request from hospitals.
According to industry data cited by NDTV, nearly 87% of pre-authorisation requests and more than 96% of discharge approvals are now being processed within the prescribed timelines.
As claim turnaround times improve across the industry, IRDAI’s attention appears to be shifting towards transparency and accountability. For policyholders, clearer explanations may not eliminate disputes over exclusions or coverage limits. But they could make it easier to understand why a claim was rejected and whether that decision deserves to be challenged.