According to a report by the Insurance Regulatory Authority of India (IRDAI), as of March 2024, insurance companies in India had 6% of claims waiting and denied 11% of health insurance claims. According to the research, insurance firms rejected and repudiated health policy claims of Rs 26,000 crore in the year that ended in March 2024, which represents a considerable rise over the previous year.
In particular, this rejection amount showed a noteworthy pattern of significant claim rejections in the health insurance sector, representing a 19.10% increase from Rs 21,861 crore rejected in the year ending March 2023.
According to the annual report, insurance companies rejected claims of Rs 15,100 crore, up from Rs 12,754 crore the year before. Furthermore, in FY24, insurers refused claims worth Rs 10,937 crore, up from Rs 9,107 crore the year before.
When an insurance company declines to handle a claim because of problems with its legitimacy, it is said to be rejected. This usually happens when the policyholder's documentation, terms, or processes have mistakes or inconsistencies. Claim repudiation, on the other hand, happens when an insurer rejects a claim after examining it and concluding that it does not adhere to the terms and conditions of the policy.
The number of claims that are successfully settled relative to the total number of claims received within a certain time period is an insurance company's claim settlement ratio. For example, a company's claim settlement ratio would be 90% if it receives 100 claim requests year and settles 90 of them. A claim settlement ratio more than 85% is deemed desirable because it indicates the insurer's trustworthiness.
Claims processed
2.69 crore health insurance claims were processed by general and health insurers during the 2023–24 period, according to an IRDAI data. The average amount paid out for each claim was Rs 31,086. Of all the claims that were settled, 28% were settled internally, and 72% were handled by third party administrators (TPAs).
Claims of death
According to the IRDAI Annual Report, life insurance firms paid out a total of Rs 48,512 crore in death claims for the fiscal year ended March 2024, up from Rs 46,380 crore the year before. This money was divided into two categories: Rs 28,868 crore for individual policies and Rs 19,644 crore for group plans.
Non-Life Insurers
In the same period, India's non-life insurance business recorded a direct premium of Rs 2.90 lakh crore, up 12.76% over the previous year. The public sector general insurers' contribution increased by 8.88%, from Rs 82,891 crore in 2022-23 to Rs 90,252 crore in 2023-24. Private sector insurers, including standalone health insurers, increased their underwriting to Rs 1.88 lakh crore from Rs 1.58 lakh crore in 2022-23.
In FY24, 24 private insurers, including standalone health insurers, had increases in premium underwriting compared to the previous year. The specialist insurers underwrote a gross direct premium of Rs 11,211 crore. According to the report, public sector general insurers had a 35.03% market share, with private sector general insurers accounting for the remaining 64.97%.
Commission paid
According to the IRDAI, life insurers paid a total commission of Rs 51,524 crore for the fiscal year 2023-24. The commission expenses ratio, which represents commission expenses as a proportion of premium, increased to 6.21% from 5.41% the previous year. Despite this rise, overall commission costs increased by 21.74% (with total premium growth of 6.06%) in 2023-24 compared to the previous year.
Insurance penetration
According to the forecast, which was released this week, insurance penetration decreased for the second consecutive year in 2023-24, falling to 3.7%. This was down from 4% the previous year, with a high of 4.2% in 2021-22 during the Covid-19 pandemic. This drop contradicts the overall trend.
