Health Insurance Frauds in India

The health insurance industry in India is growing rapidly and gaining significant attention. However, the sector is still grappling with substantial losses due to a rise in fraudulent claims. A fraudulent health insurance claim is one that manipulates or falsifies information to unlawfully gain health care benefits. These frauds can take various forms and may be committed by either the insurer or the insured. Let's understand health insurance fraud in detail.

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      Different Types of Health Insurance Frauds

      Here is the list of different types of health insurance fraud in India:

      1. Deliberate and Opportunity Fraud

        Deliberate fraud is an intentional act of presenting a loss or an accident to claim coverage under a health insurance policy. In contrast, opportunity fraud is created by policyholders by overstressing a genuine claim or providing wrong information related to Pre-existing Diseases (PEDs) or other health conditions to get the underwriting done in their favour.

      2. External and Internal Fraud

        External fraud is committed by either an individual or entities like beneficiaries, policyholders, vendors or medical service providers against health insurance companies in India. On the other hand, internal fraud is committed by the employees of an insurance company such as a manager, executive, or agents, against the policyholders or the company.

      3. Policyholder's Fraud

        Nowadays, consumers have become aware of the norms, features and rules of the insurance industry and have started exploiting this knowledge to commit fraudulent activities. Policyholder fraud can be broadly classified into three categories that are as follows:

        1. Eligibility Fraud

          Eligibility fraud is a type of health insurance fraud where policyholders provide false or misleading information about their employment status, PEDs, or information concerning the dependent. Such fraudulent activities result in beneficiaries receiving unlawful benefits.

          For example, if a person submits a claim for a dependent or relative who is not covered under the policy. Or, if an individual hides a PED, like hypertension or diabetes, when buying a policy, resulting in claims for conditions that would have been excluded.

        2. Application Fraud

          Under application fraud, the consumer knowingly enters forged information in his/her application form. This misinformation might be related to pre-existing diseases, date of birth, claim or other personal details.

          For instance, a policyholder might not enter the details related to his pre-existing diseases or serious medical conditions in order to get extensive coverage and simplify the health insurance claim process. At times, an applicant might also provide an incorrect date of birth to fall into a lower premium bracket or qualify for a specific policy.

        3. Claim Fraud

          Claim fraud occurs when consumers submit an illegal claim to obtain the benefits they are not entitled to. These fraudulent activities often involve intentional deception and may include collusion between the claimant and other parties.

          For example, a person may claim maternity insurance for a pregnancy that does not exist or is not covered, sometimes in collusion with a doctor to create false documents. In fact, a policyholder and a healthcare provider may team up to inflate medical bills, splitting the extra money. These groups are often called fraud rings.

          In another case, a policyholder can even purchase several mediclaim insurance policies without letting the insurers know this fact to enjoy health insurance claim settlement from all. Moreover, the agents or hospitals might generate higher medical bills related to hospitalization, treatment, etc., to cheer their pockets.

      Consequences of Health Insurance Fraud

      Health insurance fraud, whether intentional or unintentional, is a serious offence, and insurance providers enforce strict measures to penalize such actions. In India, the consequences of being involved in health insurance fraud include:

      • Policy Cancellation: If the fraud is deemed severe, your health insurance policy may be terminated, leaving you without coverage when you need it most.
      • Claim Denial: Fraudulent actions can result in the outright rejection of your medical insurance claim. This will eventually force you to bear the financial burden of medical expenses.
      • Personal Financial Liability: In cases of claim rejection, you may be required to cover the entire cost of medical treatments out of your own pocket.
      • Challenges in Policy Renewal: A history of fraudulent activity can create obstacles when attempting to renew your existing mediclaim insurance policy. This might leave you uninsured in the future.
      • Loss of Access to Network Hospitals: Getting flagged for health insurance fraud can lead to difficulties in accessing quality healthcare services offered through the insurer's network of hospitals.

      FAQs

      • Q1. How do health insurance companies investigate claims?

        Ans: Health insurance companies in India investigate claims by analyzing the documents submitted by policyholders or hospitals. They verify the information against the policy terms, and discrepancies identified during the process can result in the claim being rejected.
      • Q2. Why health insurance claims are rejected?

        Ans: Health insurance claims can be rejected for several reasons, such as providing incorrect or incomplete information during the application process, submitting claims for treatments not covered under the policy, or failing to disclose pre-existing conditions. Claims can also be rejected if the documentation is insufficient or if the waiting period for certain illnesses or treatments has not been completed.
      • Q3. What happens if you do not claim health insurance?

        Ans: If you do not claim your health insurance during the policy period, you will not lose your coverage. In fact, most insurers reward you with a No Claim Bonus (NCB) for not making a claim. This bonus might increase your sum insured or provide a discount on the health insurance premium at the time of policy renewal.
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      Disclaimer: The list mentioned is according to the alphabetical order of the insurance companies. Policybazaar does not endorse, rate or recommend any particular insurer or insurance product offered by any insurer. For complete list of insurers in India refer to the Insurance Regulatory and Development Authority of India website www.irdai.gov.in

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      *We will respond in the first instance within 30 minutes of the customers contacting us. 30-minute claim support service is for the purpose of giving reasonable assistance to the policyholder in pursuance of the claim. Settlement of claim (including cashless claim) is the responsibility of the insurer as per policy terms and conditions. The 30- minute claim support is subject to our operations not being impacted by a system failure or force majeure event or for reasons beyond our control. For further details, 24x7 Claims Support Helpline can be reached out at 1800-258-5881.

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      *₹400/month is the starting price for ₹ 5 lakh Health insurance for a 30 year old male & 29 years old female, living in Delhi with no pre-existing diseases

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      *Coverage of pre-existing diseases is provided by insurer as per their underwriting policy.

      *The scope of coverage may vary from plan to plan.

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