Health insurance claim: Managing healthcare expenses can present challenges in different scenarios. One common obstacle is when individuals have their health insurance claims denied because they failed to disclose a pre-existing condition. This can be a stressful situation, causing uncertainty about the next steps to take post-denial of claims. The Insurance Regulatory and Development Authority of India (IRDAI) recently announced a new regulation stating that insurers cannot deny claims for non-disclosure of pre-existing illnesses after 60 months of continuous coverage, unless fraud can be proven.
In other words, if you have paid five annual premiums, your claim cannot be rejected for hiding health information or misrepresentation, unless the insurer can demonstrate fraud.
But how to deal with the situation if your claim gets rejected on the grounds of non-disclosure of a pre-existing condition?
“If your health insurance claim is rejected due to non-disclosure of a pre-existing condition, there are several critical steps to take to address the issue effectively. First, file a complaint with the Insurance Regulatory and Development Authority of India (IRDAI). This regulatory body is responsible for overseeing insurance companies and can provide guidance or intervention if you believe your claim has been unjustly denied. Next, escalate the matter to the Insurance Ombudsman. The Ombudsman is an independent body that resolves disputes between insurance companies and policyholders. They will review your case and determine if the insurance company has acted unfairly or in violation of their obligations,” said Dr Suman Katragadda, CEO of Heaps.ai.
He added: “It is essential to understand that insurance companies are required to handle claims transparently and honour their commitments as per the policy terms. If the case is genuine and meets the criteria set by the Ombudsman Court, the insurance company may be directed to process the claim accordingly. However, insurance firms often hesitate to disclose full details or may delay payments, fearing financial implications or loss of premiums. To mitigate such issues, it is advisable to ensure that all health declarations and medical histories are accurately disclosed when purchasing or renewing insurance policies. Insurers should also make medical check-ups mandatory, similar to the central health score initiative, to prevent discrepancies and ensure fair underwriting practices. Additionally, if necessary, advocate for reforms that require periodic health check-ups to be submitted to a central database, facilitating better policy customisation and fair premium calculations. Ultimately, a proactive approach involving regulatory bodies, a thorough understanding of policy terms, and advocacy for systemic improvements can significantly enhance your chances of resolving insurance claim disputes.”
He further said insurance firms should prioritize transparency and responsibility. Regulatory bodies and insurance companies alike should guarantee the accuracy and comprehensiveness of health disclosures, while ensuring fair treatment of policyholders.
“For a more robust system, consider advocating for mandatory health check-ups as part of the insurance policy process. Just as credit scores are used to gauge financial reliability, a central health score could be implemented to assess an individual’s health status. This would provide insurance companies with more accurate data, reducing the risk of non-disclosure and ensuring that premiums are more accurately tailored to individual health profiles.
In the end, insurance companies must focus on transparency and accountability. Both regulatory bodies and insurance companies should ensure that health disclosures are accurate and comprehensive, and that policyholders are treated fairly. Addressing these gaps will not only protect consumers but also enhance trust in the insurance system,” he added.
NCDRC order on health claims
The National Consumer Disputes Redressal Commission (NCDRC) ruled in June this year that an insurance company cannot deny a claim due to undisclosed pre-existing medical conditions if the policy was issued after assessing the insured’s health. The commission stressed that insurers must gather complete information about the insured’s health and assess risks before issuing a policy.
Anita Gupta filed a complaint after Care Health Insurance rejected her claim for international medical health insurance coverage. She paid a premium of approximately ~17,864 but incurred hospital bills totaling 31,499 Australian Dollars while receiving treatment in Australia. The insurer denied cashless benefits and reimbursement, citing non-disclosure of pre-existing conditions, specifically Coronary Artery Disease (CAD) and Dyslipidemia.
Gupta submitted her insurance claim to the company, only for it to be declined due to her husband’s failure to disclose a crucial detail – his pre-existing diabetes mellitus – when applying for the policy.
The policyholder lodged a complaint against HDFC Life (formerly HDFC Standard Life Insurance Company Limited) with the Delhi State Consumer Disputes Redressal Commission, citing inadequate service and unethical business practices.
During a hearing chaired by Inder Jit Singh, the NCDRC determined that insurers are obligated to thoroughly investigate an insured individual’s medical history and evaluate associated risks prior to issuing an insurance policy. If an insurer approves a policy despite incomplete information provided by the insured on their medical conditions, they are not permitted to deny a claim at a later date on the grounds of non-disclosure.