Insurers should proactively communicate with hospitals in advance to resolve any issues
COVID-19 or not, partial claim settlement remains the top-most complaint in the health insurance segment. Charges exceeding ‘reasonable and customary’ rates, disease-wise capping and proportionate deduction clauses are the other key contributors, Milind Kharat, Insurance Ombudsman, Mumbai and Goa, tells Preeti Kulkarni in this exclusive interview.
How have you been managing hearings during COVID-times, given that Mumbai has been the worst-affected city? How are policyholders attending hearings during this time?
We have kept our office open, adhering to the guidelines of the local government. Complaints received via email are registered. We conduct online hearings with complainants and companies through video calls from office or from home. The awards passed are emailed to complainants and companies.
Have there have been several complaints from patient-policyholders on insurance companies deducting amounts, particularly related to personal protection equipment (PPE) and other consumable charges, resulting in lower claim settlement?
We have received a few complaints on COVID-19 claims. We have heard a couple of them relating to deductions from the claimed amount, and awards are being issued. The complaints first go to the companies’ grievance redressal mechanism; so, if there are more complaints, they will take them some time to reach the ombudsman offices. For COVID-19 claims, IRDAI has issued some guidelines and clarifications. The General Insurance Council has also come out with certain guidelines on treatment expenses under COVID-19 claims. We would take into account all these while resolving the complaints.
The IRDAI has also issued guidelines to insurers on denial of cashless claims by some hospitals, directing insurers to take action such hospitals…
Cashless facility is extended by insurers through their network hospitals by entering into agreements with them. If hospitals deny cashless claims and do not adhere to agreements with insurers, they can also be moved out of the networks. IRDAI has advised insurance companies to ensure that the hospitals extend cashless facilities for COVID-19 cases. If they don’t, then action may be taken against the hospitals. On their part, insurers should proactively communicate with hospitals in advance to resolve any issues. This is where a hospital regulator could have helped, but insurers can complain to government authorities, the IRDAI has conveyed.
If patients are denied cashless claims, they have to get the bills reimbursed by insurers and tend to receive lower claim settlement. What is the way out for policyholders?
For COVID-19 and even in general, insurers sometimes make deductions on the grounds that hospital charges are high, under the ‘customary and reasonable’ charges clause of the policy. They determine this on the basis of rates charged for similar procedures by similar hospitals in the city. But customary and reasonable charges are subjective and open to interpretation – what is reasonable for one entity need not be so for another. This leads to disputes. Customers do approach us when they feel they have received lower claim amounts. We take a call on the dispute on the basis of the policy’s terms and conditions.
Could you elaborate further on the other reasons for disputes?
Disease-wise capping and proportionate deductions due to higher-than-eligible room rent, pre-existing diseases and non-disclosure (of existing conditions) are among the major causes of disputes. Other reasons are application of waiting period for certain diseases, capping in the policy, not giving continuity benefits under ported policy and various exclusions.
For example, cataract surgery costs are often capped. But some hospitals charge over Rs 1 lakh, which insurers reimburse for lesser amounts. Customers often feel aggrieved here. Likewise, insurers fix package rates for certain procedures like angiography or angioplasty with network hospitals, but the hospitals charge more. We then look into policy terms to decide the cases. For example, if the package rate is not charged and it’s billed on an open tariff, then we ask insurers to compensate policyholders.
Proportionate deduction is another major reason. If the room rent is capped at one per cent of the sum insured of, say, Rs 5 lakh and patient chooses a Rs 10,000-room, then all payable expenses are reduced proportionately except the costs of medicine. However, insurers, sometimes make mistakes in calculations. They cannot reduce the claim proportionately if the hospital does not follow differential pricing for room categories. That is, if the only difference is due to room rent and other expenses are fixed and not linked to room type, insurers cannot apply blanket proportionate deduction clause for the entire claim.
Exclusions due to pre-existing diseases is also a key contributor to complaints. IRDAI has taken several steps to bring about standardisation of exclusion wordings and specify standard definition of pre-existing diseases, which will ensure greater clarity. When insurers do not take proper decisions as per policy terms or claim denial or deductions do not have justifiable reasons, the orders go against insurance companies.
Do most life insurance complaints continue to be related to mis-selling of insurance products? What further steps can the regulator take to curb the practice?
Most common complaints from life insurance are about mis-sale. Now, IRDAI has taken many steps including guidelines on benefit illustrations for curtailing mis-selling. Further steps could be taken in creating awareness amongst customers and customer education. Also, companies need to curb such practices by putting in place strong controlling mechanisms – during sale as well as at the grievance redressal stage.
How can policyholders insulate themselves against mis-selling?
Mis-selling happens by promising loans, bonuses on lapsed policies, revival of lapsed policies or refund on such policies. Distributors also sell regular premium policies despite promising a single premium plan. On their part, policyholders should not get carried away by tall promises made by agents or intermediaries. They should directly verify with the insurer. Ask the insurance company representative to put the promises in writing. They should be alert and read the policy wordings themselves within the free-look period.
What are the grounds on which the insurance ombudsman offices can reject complaints?
If the claims are considered as per terms and conditions of the policy, such cases get rejected by the ombudsman. Complaints could also get rejected if the policyholder does not file the complaint within 12 months of insurer denying the claim or sending the final reply. However, on the case-to-case basis, we do entertain complaints even if not filed within the stipulated time period after calling for comments from insurance company.