Insurance Complaints Are Rising in India: What to Do If Your Claim Is Rejected or Short-Settled

Insurance is meant to be a safety net—but for many policyholders in India, the real struggle begins after filing a claim.

Over the last few years, insurance complaints have increased sharply, especially in health and life insurance. Policyholders are facing issues such as claim rejections, partial payouts (short settlement), delays, and vague policy interpretations. According to data shared by Insurance Ombudsman offices and IRDAI reports, health insurance alone accounts for nearly 80% of all insurance complaints.

If your insurance claim has been rejected or short-settled, you are not alone—and you are not powerless.

This blog explains why insurance claims get rejected, what short settlement means, and step-by-step actions you should take to protect your rights as a policyholder.

Several systemic issues contribute to the surge in insurance grievances:

1. Complex Policy Wordings
Insurance policies are filled with exclusions, sub-limits, waiting periods, and conditions that many policyholders are unaware of at the time of purchase.

2. Rising Medical Costs
With medical inflation touching double digits, claims are larger—and insurers scrutinise them more closely.

3. Mis-selling and Inadequate Disclosure
Many policyholders are sold policies without proper explanation of coverage limits, room rent capping, disease-wise sub-limits, or co-pay clauses.

4. Documentation Gaps
Claims are often rejected due to missing medical records, unclear diagnosis notes, or incomplete hospital bills—even when treatment was genuine.

A claim rejection occurs when the insurance company denies the claim entirely, stating that it is not payable under the policy terms.

Common reasons include:

1. Treatment falling under policy exclusions
2. Disease occurring during a waiting period
3. Non-disclosure or alleged misrepresentation
4. Claim not matching the policy definition
5. Lapse in policy or premium payment issues

Important: A claim rejection does not automatically mean the insurer is right.

A short settlement means the insurer approves the claim partially, paying less than the actual admissible expense.

Typical reasons:

1. Room rent capping
2. Procedure-wise sub-limits
3. Co-payment clauses
4. Non-medical expense deductions
5. Proportionate deductions linked to room category

Short settlements are one of the biggest causes of policyholder dissatisfaction, especially in health insurance.

Step 1: Ask for a Written Claim Rejection or Settlement Letter
Always insist on a detailed written explanation. This is your most important document for further action.

Step 2: Match the Reason with Policy Wordings
Carefully compare the insurer’s reason with:

1. Policy terms & conditions
2. Coverage clauses
3. Exclusions and definitions

Many rejections are based on incorrect or selective interpretation of the policy.

Step 3: Collect All Supporting Documents
Ensure you have:

1. Complete policy copy
2. Discharge summary
3. Doctor’s prescription and diagnosis
4. Hospital bills and break-ups
5. Claim forms and correspondence

Strong documentation can reverse unjustified rejections.

Step 4: Raise a Formal Grievance with the Insurer
If you disagree with the decision, file a grievance through:

1. Insurer’s grievance cell
2. Email or online grievance portal

Insurers are required to respond within a defined timeline.

Step 5: Escalate to IRDAI or Insurance Ombudsman
If the insurer’s response is unsatisfactory:

1. File a complaint with IRDAI’s Integrated Grievance Management System (IGMS)
2. Approach the Insurance Ombudsman (for eligible cases)

Many claims get resolved at this stage without going to court.

Step 6: Seek Expert Claim Support
Insurance is a technical subject. Expert review can help identify:

1. Incorrect policy interpretation
2. Missing regulatory compliance
3. Grounds for representation or appeal

Professional grievance redressal platforms help policyholders navigate the system efficiently and lawfully.

Yes. Many rejected or short-settled claims are resolved successfully when:

1. Policy clauses are interpreted correctly
2. Medical evidence is presented properly
3. Regulatory guidelines are cited
4. The case is escalated through the right channel

Timely action is crucial—don’t delay once you receive the rejection letter.

• Don’t assume rejection means the end
• Demand transparency and written justification
• Understand your policy rights
• Escalate methodically
• Seek expert guidance when needed

Insurance is a contract, and policyholders have legally enforceable rights.

As insurance penetration grows in India, claim awareness is as important as policy purchase. Understanding your rights can make the difference between a denied claim and a rightful settlement.

Click here to register your complaint with Insurance Samadhan

Visit our website: insurancesamadhan.com

Mail us at corporate@insurancesamadhan.com