Health insurers still have some way to go in winning customer trust. Satisfaction of policyholders at the time of claims remains moderate at 82.8 on a 100-point scale, but a sharp rise in unexplained claim rejections and continued reliance on reimbursement routes are eroding consumer trust, according to Policybazaar's “Is India Happy with Health Insurance Claims? 2.0” report.
Key Findings: Dissatisfaction Drivers
The report said the main grievance of policyholders is that claims are being rejected for reasons unknown to them. Consumers want insurers to complete thorough underwriting at the onboarding stage, where all checks for getting health insurance are performed, so they do not have to worry later. However, insurers are going back to the proposal form and conducting investigations at the time of claims. This gap in communication and onboarding remains central to customer dissatisfaction.
| Metric | 2023 | 2024-25 |
|---|---|---|
| Dissatisfaction due to non-disclosure of pre-existing diseases | 33% | 15% |
| Dissatisfied claimants not given clear reason for rejection | 53% | 73% |
| Reimbursement claimants who borrowed or liquidated investments | 68% | 76% |
According to the study, dissatisfaction linked to claim rejections due to non-disclosure of pre-existing diseases declined to 15% in 2024-25 from 33% in 2023. However, this improvement has been offset by a lack of clarity, with 73% of dissatisfied claimants saying they were not given a clear or specific reason for rejection, up from 53% in 2023. The report said that denial without explanation breaks consumer trust and is difficult to rebuild.
Cashless vs Reimbursement Gap
The report highlighted a 13-point gap between cashless claims, which scored 86.7 on the HCX index, and reimbursement claims, which scored 73.7. It said reimbursement is typically not a preferred choice, with around 60% of claimants opting for it due to concerns over administrative delays during hospital discharge.
"Reimbursement is typically not a preferred choice, with around 60% of claimants opting for it due to concerns over administrative delays during hospital discharge."
Financial Burden on Policyholders
According to the study, 76% of reimbursement claimants had to borrow funds or liquidate long-term investments to pay hospital bills upfront, compared with 68% in 2023. It added that delays in processing, cited by 58% of respondents, and lack of timely updates, cited by 54%, were the main pain points for dissatisfied consumers.
Recommendations for Insurers
The report said restoring trust would require insurers to eliminate vague denial terms such as “not admissible” and provide clause-specific explanations along with clear appeal options. It added that insurers should shift medical underwriting entirely to the onboarding stage, simplify claim forms, and enable hospital-led document submissions to reduce the burden on patients.
For finance executives and treasury professionals, these findings signal potential claims cost volatility and customer attrition risks that could impact insurers' pricing strategies, capital allocation, and premium growth. The persistent reliance on reimbursement — despite its lower satisfaction — suggests operational bottlenecks that raise the cost of capital for insurers due to delayed cash flows and increased litigation risk.
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