Avoid Being Cheated by Your Private Health Insurer

Amit Bhandari (name changed) was diagnosed recently with vertigo last month. Mr Bhandari has a cashless health insurance facility with his private health insurer since 2008. He has been paying Rs 23,000 annually as health insurance premium. But he was in for a shock, when three days after hospitalization, the Third Party Administrator (TPA) denied him the cashless claim facility. He had to pay the bill of Rs 42,000 out of his own pocket.

Mr Bhandari says that the TPA refused to provide the cashless facility saying the illness could have been caused due to his pre-existing heart condition, and that teh insurer needed time to scrutinise the claim. However, it is well known that vertigo has nothing to do with a cardiac ailment.

Vertigo is the sensation of motion in the surroundings - the world spinning around - or the feeling of motion in one’s own body, while one is actually stationery. The commonest type of vertigo is benign. However, some types like labyrinthitis or vestibular neuritis, Meniere’s disease, tinnitus, etc., are caused by bacterial or viral infections of the inner ear and may need hospitalization.

While denial of the cashless facility by an insurer doesn't necessarily mean that the customer's claim has been finally rejected - as the latter still has the reimbursement route open - it does shake the customer's confidence in the insurance company.

The most critical moment in the entire tenure of an insurance policy is when a claim is actually filed. According to the annual report of the Insurance Regulatory Development Authority (IRDA), the number of claims rejected by life insurance companies for 2009-10 stood at 14,693 (it was 12,781 in 2008-09). The amount involved was Rs 245 crore. The number of claims pending at the end of 2009-10 was 15,892 (it was 16,915 in 2008-09), with a pending value of Rs 286 crore. Of these, 2,180 were pending for more than one year.

The figures would surely make any policyholder sceptical about the efficacy of his insurance cover. But this is only half the picture. The report also mentions that the life insurance companies settled 7.26 lakh claims on individual policies, with a total payout of Rs 5,958 crore. 

While the fact remains that if an insurance company wants a lower claims ratio, it must concentrate more on policy sourcing rather than the claim payment to run a profitable business. It is the sacred duty of the policyholder to follow all policies and procedures given in the insurance document and not give the insurer a chance to reject his claim.

If customers take some precautions and follow rules to keep their part of the contract, the insurer can be brought to book if it falters. There are plenty of regulations to protect customers' rights. They should, therefore, be aware of exclusions under the policy, fill their policy forms themselves, understand the riders/asterisks, and ask as many questions so that no stone is left unturned at the time of sale.

Customers must take advantage of the 15-day free look period, during which they can further compare products and clarify doubts.