Why Was My Claim Denied?

There are all kinds of reasons why insurance claims are rejected, but it is important for a policyholder to know why. It helps to keep all correspondence with your insurance company in writing, advises Jay Sampat

I experienced first-hand the insanity of the insurance claims process myself when my father-in-law was hospitalised for two months in the beginning of 2012. Despite having a Mediclaim policy with the same insurer for the past 16 years, when we filed for a cashless claim, it was rejected on flimsy grounds of pre-existing illness. His condition was critical and hospitalisation couldn’t wait. Hence, we had to admit him, pay the bills and hope the claim would be honoured.

It was June by the time that he got discharged, and having been to three hospitals, the bills had skyrocketed. This led to a lot of pressure to get the insurance claim cleared. Finally, close to seven months after he was admitted for the first time (and we had submitted millions of documents to prove that it wasn’t a pre-existing illness), we received a substantial portion of the claim. The entire credit, of course, goes to my wife’s meticulous filing and written documentation.

With scores of insurance policies being launched, it has been getting tough for the common person to understand what is covered or not under his/her insurance policy. Typically, it is only when a claim is made that one gets to know if anything is amiss. Very often, patients are only informed a day before discharge that their bills won’t be taken care of by their Mediclaim policy. Here, companies either do not specify a reason for denying a claim or provide a vague reason (such as the claim is not covered under the insurance policy).

While one can blame the insurance agent for not informing about such exclusions, there is no getting back the premium already paid. As a customer, however, you have the right to know why your claim was rejected. Hence, one must ask for reasons in writing. Once the reason has been communicated by the company, the policyholders can go back to their policy document and check whether the denial of claims was justified.

For instance, say the health insurance policy offered by a private insurer says that it will pay a specific sum in case the policyholder suffers from a ‘major inflammation’. In this case, what percentage of inflammation can be called major? The product brochure usually does not mention any specific percentage, and in such a case, you can challenge the insurance company if it denies your claim. But for that, you must know the reason why you have been denied the claim.

One can find out the reason for refusal in several ways — by calling the insurance company’s helpline, its customer grievance cell, the customer service department or by visiting the office. Experts advise that the reason/s for denial should be taken in writing. If the reason given is unsatisfactory or if the company does not respond within a reasonable timeframe stipulated on its website or in the papers given to you, you can contact a consumer forum or the insurance ombudsman. Subsequently, you may also want to think about whether to continue with the same policy or change over to another company or product.

It usually takes a week to 10 days to settle a claim after all the relevant documents are verified by the insurer. The Insurance Regulatory and Development Authority (IRDA) has stipulated that claims should be settled within 30 days of receipt of all the relevant documents. The insurer can ask for clarifications or supporting evidence if they are dissatisfied with the documents. In such a case, a deadline of six months from the date of intimation of the claim is laid down for its settlement. If the insurers fail to meet the deadline, they are obliged to pay interest on the sum assured. The nominee can approach the insurance ombudsman if the insurer fails to pay the claim on time.

To make matters easier, one should follow the procedure as per the rule book while making a claim. For starters, you need to know what your policy covers and what it doesn't - caps on room rent, doctor's fees and medicines, for instance. More importantly, initiate the claim well in advance, especially where hospitalisation is pre-planned. Since the authorisation is valid for 15 days to a month, it pays to start the process early. Also, store the TPA's number as it helps to get directly in touch with them in emergencies. Whatever you do, remember to keep all correspondence in black and white.