Lok Sabha Question No. 5816 (UNSTARRED), answered on 2026-03-30
Subject: Rejection of Claims by Health Insurance Companies
Ministry: FINANCE
Asked by: Shri Murari Lal Meena

## GOVERNMENT OF INDIA MINISTRY OF FINANCE DEPARTMENT OF FINANCIAL SERVICES

## LOK SABHA UNSTARRED QUESTION NO. 5816

ANSWERED ON MONDAY, 30 MARCH, 2026/CHAITRA 09, 1948 (SAKA)

## Rejection of Claims by Health Insurance Companies

†5816. SHRI MURARI LAL MEENA:

Will the Minister of FINANCE be pleased to state:

- (a) whether the Government is aware of instances where health insurance companies reject the claims of hospitalised patients by citing exclusion clauses or by categorising such treatments as Out-Patient Department (OPD) services;
- (b) if so, the total number of complaints received across the country during the last three years along with the details of complaints received from the State of Rajasthan, specifically in the Dausa district;
- (c) whether the Government and the concerned regulatory authority have examined if certain policy conditions allow insurance companies to overrule the clinical judgement of treating physicians, if so, the steps being taken by the Government to amend and abolish such conditions; and
- (d)  whether  there  is  any  proposal  under  consideration  by  the  Government  to implement  stricter  regulatory  provisions  or  take  punitive  action  against  insurance companies to ensure transparency and safeguard the rights of policyholders and if so, the details thereof?

## ANSWER

## THE MINISTER OF STATE IN THE MINISTRY OF FINANCE (SHRI PANKAJ CHAUDHARY)

(a) Insurance Regulatory and Development Authority of India (IRDAI) has informed that  Insurers  are  mandated  to  communicate  specific  reasons  for  rejection  to  the claimant, with reference to the relevant policy terms and conditions. It is also stipulated that no claim shall be repudiated without the approval of the Product Management Committee  (PMC)  or  its  three-member  sub-group,  the  Claims  Review  Committee (CRC) of the insurer. Among other reasons, claims may be rejected due to exclusion clauses  and  conditions  in  the  policy,  including  cases  where  hospitalization  is  not required and the treatment falls under out-patient (OPD) services.

With  regard  to  complaints,  it  is  submitted  that  there  is  no  specific  categorization capturing  instances  of  rejection  of  hospitalization  claims  on  the  ground  that  the treatment has been categorized as an out-patient service.

(b)  A  total  of  47,658  complaints  during  FY  2023-24,  64,365  complaints  during  FY 2024-25 and 73,729 complaints during FY 2025-26 up to February 2026, pertaining to various reasons in health insurance claims were registered on the 'Bima Bharosa' portal.

As IRDAI has informed that there is no specific categorization capturing instances of rejection of hospitalization claims, State wise and district wise data is not maintained.

(c) IRDAI has informed that health insurance policy terms and conditions only provide for criteria for admissibility of medical expenses incurred by the policyholder under the policy.

(d) IRDAI has introduced several measures to bring in transparency, and fairness in the health insurance claims settlement processes. The key measures are as under:

- i. Insurers shall comply with all regulations and circulars issued by the IRDAI from time  to  time.  Violations  if  any,  attract  penal  provisions  under  Section  102  of Insurance Act, 1938.
- ii.  The Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act,2025 further strengthened Section 102 of Insurance Act by increasing penalty limits.
- iii.  The Section 34(1) of Insurance Act as amended by the Sabka Bima Sabki Raksha (Amendment of Insurance Laws) Act, 2025 empowers IRDAI to issue directions to insurers and insurance intermediaries in the public interest, to protect policyholders, prevent mis-management, and ensure proper governance, including ordering  disgorgement  of  wrongful  gains,  and  bringing  insurance  intermediaries under  the  ambit  of  this  provision.  The  amended  Section  102  also  provides  for imposing penalty for non-compliance of IRDA Act.
- iv. In case  of  repudiation, rejection, or partial disallowance,  the  insurer  shall communicate detailed reasons with reference to specific policy terms. Aggrieved claimants may approach the insurer's Grievance Redressal Officer (GRO), who shall  resolve  the  complaint  within  14  days.  If  still  dissatisfied,  the  claimant  may approach the Insurance Ombudsman for adjudication. Non-compliance with the Ombudsman's award attracts a penalty of ₹5,000 per day.

The details  of  major  penalties  imposed  by  IRDAI  during  FY  2023-24  and  2024-25 against  insurance  companies  to  ensure  transparency  and  safeguard  the  rights  of policy holders are attached as Annexure.

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Annexure referred to in part (d) of Lok Sabha Unstarred Question No. †5816 on 'Rejection of Claims by Health Insurance Companies' for 30.03.2026

| PENALTIES LEVIED BY THE AUTHORITY DURING FY 2023-24   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2023-24   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2023-24   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2023-24   |
|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|
| S. No.                                                | Name of the entity                                    | Amount of Penalty (in Rs.)                            | Date of issuance of penalty order                     |
| 1                                                     | Reliance General Insurance Co. Ltd.                   | Rs.2 crore                                            | 03-01-2024                                            |

| PENALTIES LEVIED BY THE AUTHORITY DURING FY 2024-25   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2024-25   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2024-25   | PENALTIES LEVIED BY THE AUTHORITY DURING FY 2024-25   |
|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|-------------------------------------------------------|
| S. No.                                                | Name of the entity                                    | Amount of Penalty (in Rs.)                            | Date of issuance of penalty order                     |
| 1                                                     | Bajaj Finance Ltd. (Corporate Agent)                  | Rs.2 crore                                            | 15-07-2024                                            |
| 2                                                     | HDFC Life Insurance Co. Ltd.                          | Rs.2 crore                                            | 01-08-2024                                            |
| 3                                                     | SBI Life Ins. Co. Ltd.                                | Rs.1 crore                                            | 06-09-2024                                            |
| 4                                                     | Royal Sundaram General Insurance Co. Ltd.             | Rs. 1 crore                                           | 23-01-2025                                            |

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