While document-related issues are one of the main reasons for claim delays, this is not the only factor
The claims ratio for the non-life insurers stands at 82.52 per cent, according to the Insurance Regulatory and Development Authority of India’s (Irdai) report for 2023-2024. This shows that around 17.48 per cent of claims remained unpaid during that fiscal year.
Here are the reasons why a number of non-insurance claims remain unsettled despite regulatory oversight:
Rakesh Goyal, director, Probus: “The high rate of unsettled non-life claims can be attributed to various factors such as complex claim processes and verification delays, fraud and misinterpretation, and sometimes operational inefficiencies. To give an example, there are problems of insurance fraud, exaggerated claims, or non-disclosure of pre-existing diseases in the non-life insurance sector. Insurers have to conduct rigorous investigations to detect fraud, which sometimes might delay the claim settlement.”
According to experts, while document-related issues are one of the main reasons for the claim delays, this is not the only factor. In many cases, claims are processed through third-party administrators, which might lead to delays due to coordination issues. To prevent such things, insurers need to take help from AI and train their staff in a better way to handle claims efficiently.
Policyholder awareness and insurer transparency can play an important role in reducing the rising backlog of unsettled claims. Steps have been taken by regulators to simplify the claim process and even policy documents. “Many times, policyholders also lack clarity about various features of the policy, such as coverage, exclusions, and inclusions, and they might file a claim for something that is not covered by the policy, leading to rejections. Little policyholder awareness and a lack of insurer transparency create a vicious cycle. Policyholders’ unfinished submissions or invalid claims lead to rejections, which, if not clearly explained, result in disputes or even appeals,” adds Goyal.
What Policyholders Can Do: At a time when there are a number of unclaimed policies, policyholders need to be more alert and aware. First, they need to read their policy documents carefully and know what’s included and what’s not included. They also need to submit all their documents on time. In case of any issue related to a claim, they can always approach the insurer’s grievance redressal cell. They can use the Irdai’s Integrated Grievance Management System (IGMS) or dial toll-free: 155255. If need be, they could also escalate the issue to the Insurance Ombudsman.