5 min readMumbaiDec 25, 2024 10:02 PM IST
First published on: Dec 24, 2024 at 12:43 PM IST
Insurance companies disallowed and repudiated health policy claims worth Rs 26,000 crore during the year ended March 2024, indicating the high rejection level of claims in the health business. This works out to an increase of 19.10 per cent from Rs 21,861 crore rejected in the previous year ended March 2023.
Claims disallowed by insurance companies were at Rs 15,100 crore in FY24 as against Rs 12,754 crore in the previous year, according to the Annual Report of the Insurance Regulatory and Development Authority of India (IRDAI). Further, claims repudiated by insurers rose to Rs 10,937 crore in FY24 from Rs 9,107 crore a year ago.
A claim is rejected or disallowed when the insurance company refuses to process a claim for specific reasons related to its validity. This means the insurer has not yet assessed the claim for coverage but has outright rejected it due to errors or discrepancies in the policyholder’s documentation, terms or procedures. Similarly, a claim repudiation happens when the insurer denies a claim after a review and it and determines that it does not meet the policy’s terms and conditions.
Total claims paid by insurers in the health segment rose to Rs 83,493 crore, an increase of 17.71 per cent from Rs 70,929 crore last year.
Significantly, public sector insurers fared well in claims settlement ratio with a figure of 103.38 per cent while the ratio of private players was 88.71 per cent. However, standalone health insurers fared poorly with a claim ratio of 64.71 per cent, as per the data available from IRDAI Annual Report.
An insurance company’s claim settlement ratio refers to the number of claims successfully resolved versus the number of requests received in a given year. For example, if a company receives 100 claim requests in a year and successfully settles 90 of them, its claims ratio is 90 per cent. A claim settlement ratio of over 85% is a good sign, indicating that the insurer is reliable.
According to IRDAI, during 2023-24, general and health insurers settled 2.69 crore health insurance claims. The average amount paid per claim was Rs 31,086. In terms of number of claims settled, 72 per cent of the claims were settled through third party administrators (TPAs) and the balance 28 per cent of the claims were settled through in-house mechanism.
As many as 66.16 per cent of total number of claims were settled through the cashless mode and another 39 percent through the reimbursement mode. Insurers settled one percent of their claims amount through “both cashless and reimbursement mode”. During 2023-24, insurers settled about 83 percent of total number of claims registered in their books and have repudiated about eleven per cent of them and the remaining about six percent were pending for settlement as on March 31, 2024.
Meanwhile, death claims paid by life insurance companies were at Rs 48,512 crore during the year ended March 2024 as against Rs 46,380 crore in the previous year. This included Rs 28,868 crore under the individual business and Rs 19,644 crore in the group business, IRDAI Annual Report said.
During 2023-24, the non-life insurance industry underwrote a total direct premium of Rs 2.90 lakh crore in India, registering a growth of 12.76 per cent from the previous year. The contribution of PSU general insurers increased by 8.88 per cent from Rs 82,891 crore in 2022-23 to Rs 90,252 crore in 2023-24. Private sector insurers (including standalone health insurers) had underwritten Rs 1.88 lakh crore as against Rs 1.58 lakh crore in 2022-23.
Out of all non-life insurers, 24 private insurers (including standalone health insurers) operating in the year 2023-24, reported an increase in premium underwritten as compared to the previous year. The specialized insurers underwrote gross direct premium amounting to Rs 11,211 crore. The public sector general insurers together contributed to 35.03 per cent of the market share while the private sector general insurers contributed to the remaining 64.97 per cent, the report said.
Interestingly, life insurers paid a total amount of Rs 51,524 crore as commission. The commission expenses ratio (commission expenses expressed as a percentage of premium) increased to 6.21 per cent in 2023-24 from 5.41 per cent in 2022-23. However, total commission outgo increased by 21.74 per cent (total premium growth 6.06 per cent) during 2023-24 as compared to previous year, IRDAI said.
India’s insurance penetration was at 3.7 per cent in 2023-24 as compared to 4 per cent in 2022-23. The insurance penetration for the life insurance industry marginally declined from 3 per cent in the previous year to 2.8 per cent during 2023- 24. The penetration with respect to non-life insurance industry remained same at 1 per cent during 2023-24 as in 2022-23, IRDAI said.
Claims paid under health insurance business (2023-2024)
If an insured patient made a claim of Rs one lakh as hospital bill, the insurer paid only less than Rs 80,000 while the balance amount was paid by the patient. 
Claims paid under health insurance business (2023-2024)
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