Health insurance customers continue to face hurdles in getting claims settled, and the numbers from the Insurance Ombudsman’s latest annual report for 2023-24 tell the story clearly. The report shows a sharp rise in health insurance-related grievances, with a handful of insurers accounting for the bulk of policyholder complaints.
Star Health draws the most complaints
Star Health and Allied Insurance recorded the highest number of complaints, 13,308, in FY24. Of these, over 10,000 are related to partial or complete claim rejections. This figure is not only the largest in the sector but also more than the combined complaints of the next four insurers in the top five list.
Other insurers like CARE Health Insurance and Niva Bupa recorded 3,718 and 2,511 complaints, respectively.
Public sector players National Insurance (2,196) and New India Assurance (1,602) also featured in the top five, though their volumes were far lower.
Star Health, in its response to Business Standard, attributed the higher grievance load to the structure of its business. Nearly 90 per cent of its portfolio comes from the retail segment, unlike other insurers who lean more on group policies. This, the company said, naturally results in more direct customer interactions and disputes.
Complaints per policyholder
Absolute complaint numbers often reflect company size. A clearer view comes from looking at the rate of complaints per one lakh policyholders. Here too, Star Health ranks the highest with 63 complaints per lakh policyholders in FY24.
Care Health recorded 16, while Niva Bupa registered 17 complaints per lakh.
The two public sector insurers fared better, with National Insurance at five and New India at just one complaint per lakh policyholders.
Claim repudiation drives disputes
The majority of policyholder grievances fall under Rule 13(1)(b) of the Insurance Ombudsman Rules, 2017, which deals with partial or complete rejection of claims. Here also, Star Health accounted for over 10,000 such cases (the highest among all insurers), while CARE reported 2,393 and Niva Bupa 1,770 cases.
Awards in favour of customers
When such disputes are escalated, the Ombudsman can issue either a non-binding recommendation or a binding award. In FY24, Star Health was directed to pay compensation in 7,506 cases, amounting to over Rs 6,000 crore. CARE Health (Rs 2,012 crore), Niva Bupa (Rs 1,654 crore), National Insurance (Rs 540 crore) and HDFC Ergo (Rs 648 crore) were also ordered to make large payouts.
Complaints rising in health insurance
While grievances in life and general insurance declined in FY24, health insurance complaints surged by 21.7 per cent year-on-year. The Ombudsman received 31,490 health insurance complaints compared to 25,873 the previous year. Private sector insurers accounted for the vast majority of these cases.
How is Irdai solving the rising number of policy grievances?
The Insurance Regulatory and Development Authority of India (Irdai) has now moved to strengthen grievance redress by proposing the appointment of an Internal Insurance Ombudsman within each insurance company.
Soon, every insurer will be required to appoint an internal ombudsman that will handle the policyholder complaints up to Rs 50 lakh. The officers are supposed to step in when insurers have rejected (or failed to address) claims within 30 days. This move is being seen as a necessity that would speed up the resolution process for policyholders.
