Insurance policy is taken in happier times and a claim is made when the times are tough.
Insurance is a contract and, therefore, the wordings in a policy are verbose and couched with legal jargons. And hardly anyone reads the policy.
Take for example a health insurance policy.
When an illness strikes the first priority is to get treatment. It is then that the patient, bystander or a family member think about the policy taken earlier.
Whom to contact - the insurance company or TPA?
Hospitals have help desks that comes in handy. Then comes the questions, what is the room rent limit, is there a Co pay, is the illness preexisting, is the hospital in the network?
All answers are available in the policy but in fine print, it takes time to find answers to these questions but the treatment cannot wait.
Having an insurance policy is good for treatment to begin but they require a cashless authorization. Hospitals have a Help desk which helps but getting a cashless authorization is not that easy. If this is not obtained in time, hospital asks for a deposit which adds to frustration.
If a cashless is obtained, things are simple. If not, the patient pays first and apply for reimbursement from the Insurance Company later.
After this ordeal comes “partial settlement.” There are many disallowed items from the bill. Insurance companies routinely exclude medical consumables, administrative fees etc. Additionally, caps on room rent, sub limits for procedures like cataract and certain exclusions are deducted.
Consider these numbers – In Financial Year 2025-26, more than 40% of Indians had health insurance with a premium of more than Rs. 1.37 Lakh Crores.
Over 3.5 Crore claims were made for about Rs. 1.10 Lakh crores.
The numbers are overwhelming but not important for a policyholder waiting in a hospital or waiting for a claim to be settled. For him, prompt attention from the insurer and effective medical treatment are uppermost in the mind.
What if he is not satisfied with the claim experience? There are multiple avenues for grievance redressal but these works only after the patient is discharged and money paid to the hospital.
The redressal mechanisms include grievance cell of the concerned insurance company, the Bima Bharosa portal of Insurance Regulatory and Development Agency of India (IRDAI), Department of Financial Services (Ministry of Finance) etc.
In addition, legal remedies are available – Insurance Ombudsman and Consumer Forum.
However, all these take time even months and years at times.
In reply to a question in Rajya Sabha, Government informed that General insurers received 1,11,502 complaints and attended to 1,02,669 complaints and Health insurers reported 64,171 complaints, of which 63,736 were resolved during Financial Year 2025-26.
Private health insurance policies are of two types – Individual or retail policies (including family floater plans) and corporate insurance policies covering employees and their families (Group Mediclaim).
Retail health policies in FY 2o25-26 accounted for Rs. 56,695 crores which is a 20% jump from the previous year. Group polices was to the tune of Rs. 68541 crores up by 13%.
Government Health insurance is primarily provided by Pradhan Mantri Jan Arogya Yojana (PMJAY) also known as Ayushman Bharat. Several states cover this under “Trust Model” meaning that the government takes care of claims from their funds. Other states have an “Insurance Model” whereby policy is taken from an insurance company. Tamil Nadu, one of the more progressive states as far as health insurance is concerned has an insurance model. Tamil Nadu finance minister recently stated that the coverage is proposed to be increased from Rs. 5 lakh per family to Rs. 25 lakhs under the Chief Minister’s Comprehensive Health Insurance Scheme (CMCHIS).
Government schemes normally cover those below the poverty line. Recently it was announced that all senior citizens aged 70 and above shall get free health insurance coverage of up to ₹5 lakh under the expanded Ayushman Bharat PM-JAY scheme, regardless of their income or socio-economic status.
Two important factors contributed to expansion of health insurance which now accounts for over 40% of total General insurance premium. Effect of Covid is the primary reason. While Rs 58,572 crore was collected in 2020-21 as health insurance premium by insurance companies, this figured jumped to Rs 73,330 crore in the next financial year. The other reason is the removal of 18% GST announced in September 2025.
Understanding the fine print of an insurance policy is difficult but not impossible.
IRDAI issued instructions to insurance companies to give a simple Customer Information Sheet along with an insurance policy, With effect from 1st January, 2024. “It is important for a policyholder to understand the terms and conditions of the policy that has been purchased. Since a policy document may be fraught with legalese, it is imperative to have a document that explains in simple words, the basic features with regard to the policy and provides necessary information.” IRDAI stated in their letter to all insurance companies. Further, IRDAI said “It is observed that several complaints are still emanating as a result of asymmetry of information between insurer and the policyholder.”
A customer Information Sheet gives an overview of the policy including coverage and exclusions. However, it is more important to read the entire policy including its fine print. After all, don’t we read Banking and property documents carefully?
Government health schemes and private health insurance cover about half the Indian population. With rising hospital expenses and annual medical inflation of about 14%, insurance is absolutely necessary even with its shortcomings.
Without insurance, poverty is only an illness away.
