Claim Repudiation Cases

What repudiation is

Claim repudiation means the insurer rejects a health insurance claim, in full or in part. The insurer must give its reasons in writing, with reference to the policy terms it relies on. Under IRDAI's Master Circular on Health Insurance Business (29 May 2024), a claim cannot be repudiated without the approval of the insurer's Product Management Committee or its Claims Review Committee.

A refusal has to rest on the policy terms or on what was declared in the proposal.

The common grounds

Waiting periods are a frequent ground. A claim for a listed condition made during the specific-disease waiting period is rejected whether or not the condition was pre-existing, because that waiting period applies even to a newly diagnosed disease.

Exclusions are another. Cosmetic and aesthetic procedures are generally excluded; any exceptions, such as reconstruction needed after an accident, depend on the policy wording. Non-medical expenses on the bill are generally not paid either, unless the policy or an add-on covers them.

Non-disclosure of a pre-existing disease can defeat a claim, although after 60 continuous months of cover a policy or claim cannot be contested on that ground unless fraud is established. Hospitalisation for an ailment that could have been treated on an outpatient basis may be rejected as medically unnecessary. Gaps in documentation also lead to disputes: missing papers can delay settlement, and the insurer may ask for the documents it needs to settle the claim.

Intimation and pre-authorisation

Policies set a time for telling the insurer about a hospitalisation. For an emergency admission the requirement is typically within about 24 to 48 hours of admission; the exact period is in the policy wording. For a planned admission, prior approval, called pre-authorisation, is required.

A cashless pre-authorisation is a provisional approval. At final settlement the insurer can still reduce or reject the claim if detailed scrutiny reveals an exclusion, non-disclosure or billing irregularities. An approval at admission is therefore not a guarantee of the final amount.

If the claim is refused

The first step is the insurer's own grievance redressal, and the insurer must resolve a complaint within 14 days. If that does not settle the matter, the policyholder can register the complaint on Bima Bharosa, IRDAI's portal (formerly IGMS), approach the Insurance Ombudsman, who can award up to ₹50 lakh, or go to a consumer commission.

The Ombudsman and a consumer commission cannot be pursued at the same time. A complainant who does not accept an Ombudsman's award can still go to a consumer commission afterwards.

Rules at a glance

Key points

• Repudiation is the rejection of a claim in full or in part, with written reasons tied to the policy terms.
• A claim in the specific-disease waiting period is rejected even if the disease is newly diagnosed.
• Cosmetic surgery is generally excluded; exceptions, such as reconstruction after an accident, depend on the policy wording.
• A cashless pre-authorisation is provisional and can be revised at final settlement.
• Hospitalisation that was not medically necessary can be rejected.
• A refused claim goes first to the insurer's grievance cell, then to Bima Bharosa, the Ombudsman or a consumer commission.

Common misunderstandings

• A pre-authorisation is not a final approval: the claim can still be reduced or rejected at final settlement.
• A new diagnosis does not escape the specific-disease waiting period: the period applies to listed conditions whether pre-existing or not.
• Not every cosmetic procedure is necessarily excluded: exceptions, such as reconstruction after an accident, depend on the policy wording.
• The Ombudsman and a consumer commission are not parallel routes: the same matter cannot be pursued before both at once.

Questions people ask