Why Health Insurance Claims Get Rejected in India: 8% Rejected, ₹94,248 Crore Paid (IRDAI FY25 Data)

Your health insurance premium is paid, your family is covered, and then one hospitalisation later you learn the truth: in FY25, Indian insurers rejected roughly 8% of all health insurance claims. That is nearly 1 in every 12 claims — real bills, real hospitals, zero payout. The Insurance Regulatory and Development Authority of India's (IRDAI) Annual Report for 2024-25 puts the scale in hard numbers: insurers processed 3.26 crore health insurance claims and paid out ₹94,248 crore during the year. But the rejection figure, combined with a 41% surge in grievances on IRDAI's Bima Bharosa portal, has forced the regulator to act. Insurers must now explain rejections properly and cite the exact policy clause. This article explains, in plain language, why claims get rejected, what the rules actually say about timelines, and how to make your claim rejection-proof.

The numbers that should worry every policyholder

Here is what IRDAI's Annual Report 2024-25 (reported by Mint and NDTV in June 2026) shows: - 3.26 crore health insurance claims processed in FY25, with ₹94,248 crore paid out - About 8% of claims repudiated (rejected) — roughly 1 in every 12 - Around 87% settled, with about 5% still pending at year-end - Grievances on the Bima Bharosa platform rose 41% year-on-year to 1.37 lakh in FY25, up from 97,503 in FY24 - Nearly 70% of complaints in the health and general insurance segment relate to claim rejections, delays, partial payments, or documentation disputes The uncomfortable part: Parliament was recently told that IRDAI collects data only on overall repudiation rates — not the reasons behind individual denials at an insurer-by-insurer level. In other words, nobody at the regulator can tell you exactly why your claim was rejected. That is precisely why IRDAI has now tightened what insurers must tell you when they say no.

The real reasons claims get rejected

Disputes almost always come down to clauses policyholders discover for the first time at the hospital billing counter. The most common ones: 1. Non-disclosure of pre-existing conditions. Industry experience suggests this contributes to 30–40% of serious rejections (industry estimates, not IRDAI-published figures). If you did not declare diabetes, hypertension, or a past surgery in the proposal form and a related claim arrives, the insurer can reject it for misrepresentation. The 60-month moratorium rule (explained below) is the counterweight — but only if the policy has run long enough. 2. Waiting-period violations. Roughly 25% of rejections in industry experience trace to waiting periods. Health policies typically impose a 30-day initial waiting period, 2–4 years for specific procedures (cataract, hernia, joint replacement), and up to 36 months — the regulatory maximum — for pre-existing diseases. 3. Sub-limits, co-payments and room-rent caps. Your sum insured may be ₹10 lakh, but the policy can cap room rent at 1% of sum insured per day, or apply a 20% co-payment on certain treatments. Claims get partially rejected when the bill exceeds these internal ceilings. 4. Exclusions and non-medical expenses. Cosmetic procedures, dental work, fertility treatments and many alternative therapies are excluded in most plans. Separately, "non-medical" consumables — gloves, syringes, registration charges — are routinely carved out of payouts. 5. Sum insured exhausted. A second hospitalisation in the same policy year after the first claim consumed the cover will be rejected, unless the policy has a restoration or no-claim-bonus benefit. 6. Documentation and procedural lapses. Late intimation of the claim, missing discharge summaries, or a treating-hospital bill that does not match the diagnosis can stall or kill a claim.

The new rule: insurers must now explain themselves

Under IRDAI's latest reforms, when a claim is repudiated the insurer is expected to give you detailed reasons and cite the specific policy clause the decision rests on. This is a meaningful shift: vague letters saying "as per policy terms and conditions" no longer cut it. Why this matters for you: a rejection that names the clause gives you something to fight. You can check whether the clause actually applies to your treatment, whether the waiting period genuinely had not expired, or whether the exclusion was disclosed to you at purchase. Every rejection letter should now be the starting point of your appeal, not the end of it.

Timelines the law gives you — and the insurer

IRDAI's rules set hard clocks that many policyholders never use: - Cashless pre-authorisation: the insurer/TPA must decide within 1 hour of receiving the request - Cashless discharge approval: final decision within 3 hours of the hospital's request; if the insurer's delay keeps you admitted longer, the insurer may have to bear the extra hospitalisation cost - Reimbursement claims: settle or reject within 30 days of receiving the last necessary document - If investigation is warranted: settle within 45 days — and delays attract interest at 2% above the bank rate - Pre-existing disease waiting period: maximum 36 months - Pre-existing disease definition: a condition diagnosed or treated in the 48 months before the policy started - 60-month moratorium: after 60 months of continuous coverage, a health policy generally cannot be contested for non-disclosure or misrepresentation — except in cases of proven fraud. An increased sum insured can carry its own separate moratorium period. Save these numbers. They are the difference between accepting a rejection and overturning one.

What about life insurance claims?

IRDAI's Handbook on Indian Insurance Statistics 2024-25 also publishes claim settlement ratios (by number of policies) for FY25. The standout names: - Shriram Life — 100% - Aditya Birla Sun Life — 99.98% - HDFC Life — 99.98% - PNB MetLife — 99.98% - SBI Life — 99.14% - Tata AIA — 98.66% - LIC — 97.08% (8,48,145 claims paid) - Axis Max Life — 94.41% - Bajaj Allianz — 93.94% - IndiaFirst — 86.98% A high settlement ratio does not guarantee your claim will be paid — every claim is assessed on its own facts, especially in the early policy years — but it is a useful signal of how an insurer behaves when families file.

How to make your claim rejection-proof: a checklist

1. Declare everything at purchase. Every medication, diagnosis and surgery goes into the proposal form — understatement is the single biggest rejection trigger. 2. Read the waiting periods before you need the policy. Know the 30-day, named-procedure and pre-existing-disease clauses in advance. 3. Intimate the insurer immediately on hospitalisation. Most policies require intimation within 24 hours for planned admissions and 24–48 hours for emergencies. 4. Collect and photograph every document. Discharge summary, bills, prescriptions, investigation reports — keep digital copies of all of them. 5. Track the timelines. If pre-authorisation crosses 1 hour or discharge crosses 3 hours, escalate in writing. 6. Read the rejection clause, not just the rejection. Demand the specific clause citation IRDAI requires, then verify whether it genuinely applies.

If your claim is still rejected: the escalation path

1. Insurer's grievance cell first. File a written complaint with the insurer's grievance redressal officer, attaching your documents and the clause dispute. 2. IRDAI's Bima Bharosa portal. If the insurer does not resolve it, register the grievance online. Note the rising pendency — keep every reference number and follow up. 3. Insurance Ombudsman. For claim disputes up to ₹50 lakh, the Ombudsman is free, fast and binding on the insurer (you retain the right to approach courts if you disagree). Do not accept a first rejection as final. The data says most disputes are about clauses — and clauses can be argued. This article is for educational purposes only and is not financial advice. Please consult a SEBI-registered investment adviser for personalized guidance. Investments are subject to market risk.