Claims Delays Plague Indian Insurers
Bank employees in India are reporting that third-party administrators (TPAs) are rejecting insurance claims for minor, easily correctable issues like date mismatches. These rejections are causing months-long delays, fueling widespread customer frustration with cumbersome claims processes and prompting calls for regulators to enforce stricter rules.
Third-Party Administrators (TPAs), intermediaries between insurers and policyholders, processed 69% of the 32.6 million health insurance claims settled in the 2024-25 fiscal year. While intended to streamline the process, TPAs are often at the center of disputes regarding documentation and policy interpretation. The Indian insurance market is substantial and growing, with health insurance premiums alone reaching ₹1.27 lakh crore (approximately $152 billion USD) in the 2024-25 fiscal year. This represents a 9.19% increase from the previous year, highlighting the sector's rapid expansion and the increasing number of claims being filed. Leading TPAs in India by service revenue include Medi Assist, MDIndia, and Vidal Health. The TPA market itself is a significant industry, valued at $14.5 billion in 2025 and is projected to grow, with major players consolidating their market share through acquisitions. A major pain point in the claims process is the high rate of rejection and partial settlement. In the 2024-25 fiscal year, health insurance complaints surged by 41% to 137,361, with nearly 70% of these grievances related to claim denials, delays, or partial payments. This indicates a systemic issue in how claims are processed and communicated. The Insurance Regulatory and Development Authority of India (IRDAI) has introduced new guidelines to address these issues. As of April 2024, the waiting period for pre-existing conditions has been reduced from four to three years, and the moratorium period, after which a claim cannot be rejected for non-disclosure (except in cases of fraud), has been shortened from eight to five years. Insurers are increasingly turning to technology to improve the claims process. Artificial intelligence and machine learning are being used for fraud detection, risk assessment, and automating underwriting, which can help in reducing errors and speeding up approvals. This shift towards digitization aims to bring more transparency and efficiency to a system currently fraught with operational challenges. Case studies reveal common reasons for claim rejection, such as alleged non-disclosure of minor health issues like psoriasis or acidity, which are later overturned with expert intervention. In other instances, claims for treatments like COVID-19 have been only partially paid, with insurers citing hospital charges exceeding government-approved rates. For special investigation units (SIUs) and underwriting departments, the key challenges include managing high volumes of claims, dealing with fraudulent practices like inflated bills, and navigating the complexities of legacy systems that are often not equipped for modern data analytics. The lack of standardized digital health records across the country further complicates the verification process.
