In a concerning trend for India's health insurance sector, complaints rose sharply by 45% in the second quarter compared to the previous quarter. This surge in grievances has put the spotlight on claim rejections and mis-selling practices within the industry.

Complaint Overview

According to data from Insurance Samadhan, a total of 974 cases involving claims worth over ₹119.00 crore were reported. The health insurance sector dominated the grievance landscape, accounting for 67.50% of all complaints. Life insurance followed at 25.50%, while general insurance represented 6.90% of the grievances.

Company-wise Breakdown

Star Health & Allied Insurance emerged as the company with the highest number of complaints:

Star Health officials attributed their higher complaint volume to their predominantly retail business model, which involves more frequent customer interactions.

Nature of Complaints

The majority of grievances were related to:

• Partial or complete claim rejections
• Mis-selling of policies, particularly endowment policies

Industry Insights

Industry experts have identified several factors contributing to the rise in disputes:

• Aggressive agent commissions and sales targets leading to mis-selling
• Consumers facing higher premiums or rejections due to pre-existing conditions
• Lack of transparency in policy terms and conditions

Implications for Consumers

This surge in complaints underscores the need for potential policyholders to:

• Carefully review policy documents before purchasing
• Disclose all relevant health information to avoid future claim rejections
• Understand the terms and conditions, particularly regarding pre-existing conditions

Regulatory Outlook

The significant increase in complaints may prompt regulatory bodies to:

• Enhance scrutiny of insurance companies' claim settlement practices
• Implement stricter guidelines for policy sales and agent conduct
• Encourage more transparent communication between insurers and policyholders

As the health insurance sector grapples with these challenges, it remains crucial for both insurers and policyholders to work towards more transparent and fair practices in policy sales and claim settlements.

In a significant development for the health insurance sector, the GST council has announced the exemption of Goods and Services Tax (GST) on individual health and life insurance policies. This change is set to take effect from September 22, 2025, marking a notable shift in the insurance landscape.

Insurance Companies React

Several major players in the insurance industry have swiftly responded to this announcement. ICICI Lombard, Niva Bupa, and Tata AIG are among the companies that have already begun offering GST-free health insurance policies to customers. However, there's a crucial caveat: while these policies can be purchased now, the coverage will only commence from September 22, 2025.

The Coverage Gap

This situation creates an unusual scenario where customers can buy insurance policies well in advance, but will not have any coverage until the effective date. Nikhil Jha from Hercules Insurance Advisors explained that insurance companies are in the process of completing their backend onboarding procedures.

Risk Considerations

The arrangement poses a potential risk for customers who might purchase these policies now. During the interim period between purchase and the coverage start date, customers will essentially be assuming the risk of having no insurance coverage. This gap in protection is a critical factor that potential buyers need to consider carefully.

Industry Preparations

While customers weigh their options, insurance companies are busy behind the scenes. The time between now and September 2025 is being utilized by these firms to ensure their systems and processes are fully aligned with the new GST-free structure. This preparation period allows insurers to smoothly transition to the new tax-exempt status of health and life insurance policies.

Looking Ahead

As the insurance sector adapts to this significant change, it remains to be seen how this will impact the overall market dynamics. The GST exemption could potentially make health and life insurance more accessible to a broader segment of the population, but the deferred coverage start date adds a layer of complexity to the decision-making process for consumers.

Potential policyholders are advised to carefully consider their immediate and long-term insurance needs when evaluating these new GST-free offerings. It's recommended to thoroughly review policy terms and consult with insurance advisors to make informed decisions about health and life insurance coverage.