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insurance claims: Not disclosing pre-existing health conditions main reason for claim rejection


Insurers commonly reject claims due to the non-disclosure of existing health conditions, reported TOI.

Approximately 25% of health insurance claims face rejection due to the policyholder failing to disclose pre-existing conditions such as diabetes or hypertension during the purchase. An additional 25% of rejections occur when policyholders are uninformed about coverage terms and attempt to claim for outpatient department (OPD) or other treatments not covered by the policy. Furthermore, a significant portion of claims (16%) is declined because the claimant did not respond to inquiries.

PolicyBazaar, which has an insurance broking licence, analysed the data on two lakh health insurance claims between April to September 2023, of which 30,000 were rejected.

From the policyholder’s point of view, the most significant financial impact arises from claims denied due to non-disclosure. Although an equivalent number of claims are declined for falling outside the policy’s coverage, these typically involve low-value claims, occasionally including rejections for experimental procedures.

“While rejections due to the treatment being outside the scope of the policy are numerous, they are usually for low-value expenses. The insured file many claims out of ignorance. We have seen OPD claims and claims for spectacles, which are, of course, not covered,” said Amit Chhabra, chief business officer – health insurance, PolicyBazaar.

“Claims are sometimes rejected due to the non-disclosure of material facts. While distributors may sometimes overlook or fail to ensure disclosure, the insured, as a party to the contract, bears responsibility. It is crucial for insurance buyers not to gloss over the proposal form, as the insurer may reject claims even if the non-disclosure is unrelated to the ailment,” said Segar Sampathkumar, director of health at the General Insurance Council, which represents the industry.According to Chhabra, most rejections are due to a lack of understanding of the policy. “Non-disclosure affects even those claims that are unrelated to the pre-existing condition. The biggest giveaway is the initial report that the doctor prepares on admission. During admission, the insured has no choice but to declare all existing conditions as the course of treatment depends on it,” said Chhabra.Insurance laws mandate that the insured disclose all facts that are material to the insurer’s decision to accept the proposal. So, even if non-disclosure is not material to the cause of hospitalisation, the insured can reject the claim.

(With TOI inputs)


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