Daybreak - Why your health insurance works great — until you need it

Episode Date: April 5, 2026

Imagine paying insurance premiums for years and then one day you actually need it. You're in a hospital, or someone you love is. And the insurer says: no.In the last financial year, Indian health insurers rejected claims worth ₹30,000 crore. Nearly one in eight claims were denied or left pending.And what's wild is how far back the problem starts. There are agents filling out forms incorrectly to earn a faster commission. Hospitals that know exactly what a surgery costs but keep the number vague on purpose. And insurers operating on margins so thin that scrutinising every claim is more about survival than greed.The Ken reporter Sudeshna Ray dived into this for The Ken’s Make India Competitive Again newsletter. Host Snigdha Sharma reads it for you in this episode.Apply for The Ken's Event Manager role hereDaybreak is produced from the newsroom of The Ken, India’s first subscriber-only business news platform. Subscribe for more exclusive, deeply-reported, and analytical business stories.

Imagine paying insurance premiums for years and then one day you actually need it. You're in a hospital or somebody that you love is and the insurer says no. In the last financial year, Indian health insurers rejected claims worth 30,000 crore rupees. Nearly one in eight claims were either denied or left pending. And what's wild is how far back the problem starts. There are agents filling out forms incorrectly to earn a faster commission. Then there are hospitals that know exactly what a surgery costs, but they keep the numbers vague on purpose.

And then there are the insurers who are operating on margins so thin that scrutinizing every claim is not really greed, it's survival. My colleague Soudeshina Ray dived into this for the Kens, Make an India competitive again newsletter, and I am going to be reading it out for you today. What really struck me while reading this was how many people are actually doing the right things and still getting blindsided when it matters the most. Welcome to Daybreak, a business podcast from the Ken. I'm your host, Nick Dhar Sharma and I don't chase the news cycle. Instead, every day of the week, my colleague Rachel Vargheese and I will come to you with one business story that is worth understanding and worth your time. Today is Monday, the 6th of April.

A stitch in time saves nine, they say. But when Somia, a Bengaluru resident, needed nine stitches instead of six, her hospital revised the bill and her insurer rejected the higher claim. Like most people, Somia had preemptively bought an insurance policy so she wouldn't have to worry about money in an emergency. Yet, when the moment arrived, money was all that she could think about. In the financial year 2025, Indian health insurance companies rejected claims worth 30,000 rupees, a nearly 17% jump from the previous year,

according to a 2025 report by India's insurance regulator. Nearly one in eight claims were rejected. Of the 37.2 million claims filed, 4.6 million were either denied or left pending. As a result, grievances in health and general insurance jumped 41% in FY 2025, with Starr, Care, Niva Bupa and Aditya Birla, each recording over a 20% increase. The Ken ran a poll in a recent story asking subscribers who they trusted more, a hospital or an insurer, to not interfere with their course of treatment. The majority of the 420 voters either clicked neither or said it dependent on transparency,

rules and enforcement. Their biggest frustration, not knowing why their claims were rejected. But way before the hospital or the insurer can become the claim rejection villain, there is a third actor in this story. In 2022, Pyle bought a new policy from Niva Pupa, a Delhi-based insurance company for her 63-year-old father. He has been diabetic for the past 15 years, she remembers telling her agent. The agent instead wrote one year on the form. Writing one year meant a quicker approval and a faster commission for the agent. It was only earlier this year when Pyle had her policy reviewed by an independent consultant that she realized it completely skipped this long-term condition. Not disclosing pre-existing diabetes meant they had directly set themselves

up for a future claim denial. The prime reason for rejection is misselling, said Avigyan Mitra, the independent health insurance consultant. Mitra launched his advisory platform, Zenoa, in 2019, to help people navigate redressel and has analyzed over 120 rejected claims in the last five years. Non-disclosure makes up roughly 25% of all rejected claims. The Indian health insurance sector is losing 8,000 to 10. $10,000 crore rupees every year to fraud, waste and abuse according to a BCG Medi Assist report.

The Ken reviewed a phone call recording where an insurance agent was selling a policy to a patient who has coronary artery disease or CAD. The agent said, and I'm quoting, If you can't forget that heart in the heart in the heart, then the tablet be able to cover and do you. Meaning, if you can forget that you had pain in the heart and had taken this tablet, I can get you an insurance cover for heart issues too. While some agents coerce customers into hiding information, sometimes they willingly fill out forms incorrectly. So who then is responsible

here? At least according to the Consumer Protection Act of 2019 and the Insurance Act of 1938, and I'm quoting, the insurer is responsible for the acts of their agents who are their representatives to a customer. The Supreme Court, High Courts and the Consumer Courts of India have consistently upheld that the owners should not be entirely on a consumer to read and know a policy's fine print, especially given how policies are sold and how large agent commissions can be. That means, insurers should proactively track each of their agents. But this is nearly impossible to do in a country like India, where agents simultaneously represent multiple insurance companies and sell competing policies.

Insurers in other countries distribute the risk. The U.S. has 1,500 active health insurance entities, while the UK's National Health Service, or NHS, covers all citizens and additionally has four main private companies. India, by contrast, has only eight standalone health insurers, along with roughly 22 companies, selling health insurance for a vastly larger population. And the risk burden, poor insurer is significantly higher than in other countries with larger, more distributed systems. Naturally, this pressure shows up at the claims desk.

Most Indian health insurers operate with tiny underwriting margins, typically between 1 to 3 percent and even a 1 to 2 percent rise in medical costs can lead to losses for more. most of them. Underwriting alone is unsustainable and their only real income is from investment premiums. That's a story for Naderde. Mitra also said if claims are made within the first two or three years of buying a policy, patients are usually forced to pay out of pocket and apply for reimbursement, an insurer's polite way of buying time to investigate. Given the high cost of healthcare delivery in India, it is no surprise the insurer too is extra delivery. 80% of the medical necessity disputes get resolved with the right documents, Mitra said.

He suggests looking at policy like a legal document. Ask a lawyer, he said, or take it to a claim redressal consultant like himself. But the insurers are not the only problem in the system. India lacks a health regulator that can standardize practice and pricing. This gap currently allows hospitals to charge whatever they please and prescribe any number of treatment courses. Insurance bodies have been asking for a health regulator for a long time now as I wrote in a previous edition of this newsletter. And for good reason, currently the cost of surgeries could be anything and so can the courses of treatment. The cost of a hernia surgery,

for instance, can range from 1,000-roupes in a 30-bed hospital to 10-lacrupes at an upscale hospital like Breach Candy in Mumbai. Billing mostly varies based on the type of hospital room that the patient chooses. A lot of billing practices in legacy hospitals are confusing, and the logic behind it is not exactly clear, said Varund Dube, the founder of Super Health, a Bangalore-based multi-specialty hospital. Typically, hospitals set operation theatre or OT costs equal to a surgeon's fee. So if an experienced surgeon charges double the amount,

then the OT, a fixed resource, also doubles in fee. This makes no sense, said Dube. If we freeze the cost of surgery upfront, people will go rate shopping elsewhere, said a Delhi-based doctor and hospital executive. And to guess what a surgery might cost on a case-by-case basis, hospitals have estimate desks. Hospitals do these surgeries every day and have been doing them for years. Shouldn't they already know exactly what it costs? And of course, hospitals do know.

Yet, to maximize revenue, they avoid using a fixed-price model. The hospital industry calls this an open bill, said Dubay. Most hospitals also compensate doctors through commissions instead of fixed salaries. So piling on more services, procedures and tests translates to direct income. Insurers have very little power to lower health care delivery costs. They are often forced to make the payouts even if they don't fully agree with what the hospital is billing, said Dubet. He believes that the insurer is a victim. of this messy, high-capex system that hospitals run on today.

But this dance between the insurer and the hospital is not unique to India. Variable healthcare pricing and procedures exists in the US, China, Brazil, South Africa and many other countries. But for India, the burden on each insurance is higher, and most of the population cannot afford to pay out of pocket in a health crisis. Even if a health regulator comes in, it cannot standardize pricing across. all types of hospitals in the country, said an insurance industry executive. A smaller hospital with less available equipment and amenities may need more money for the same

surgery they added. India's top hospital accredition body is trying to build a comprehensive hospital ranking system to decide which hospital gets what price for a surgery. This prospect, too, seems far away, said the executive. When the bills exceed the pre-approved amount, it is the customer who pays the price out of their pocket. Meanwhile, insurers often defend their claim rejection by saying that a procedure within the bill was not a medical necessity. Non-disclosures and policy misunderstandings reflect the gap between insurers and their distribution networks. It is all currently in a deadlock and three

things need to change. How insurance is sold, how hospitals are run and how costs are underwritten. Until then, a policyholder is probably better off keeping legal help close. Daybreak is produced from the newsroom of the Ken, India's first subscriber-focused business news platform. What you're listening to is just a small sample of a subscriber-only offerings and a full subscription offers daily, long-form feature stories, newsletters and a whole bunch of premium podcasts. To subscribe, head to the Ken.com and click on the red subscribe button on the top of the website. Today's episode was hosted and produced by my colleague's Niktha Sharma and edited by Rajiv Sien.