76% of Health Insurance Reimbursement Claimants Face Immediate Financial Strain: Report
Around 76% of health insurance reimbursement claimants in India had to borrow money or liquidate investments to cover medical expenses, turning their treatment into an immediate financial burden, according to a report by Policybazaar, an online insurance marketplace.
The report, based on a national consumer survey, found that the ability to manage costs solely through liquid savings dropped from 32% to 24% in 2024-25. Financial stress at the time of raising claims has increased across all city tiers between 2023 and 2025, with metros seeing the sharpest jump of 14 percentage points to 76%. Tier-2 cities recorded the highest incidence overall at 78%, while Tier-3 cities saw a 6 percentage point rise, with 71% of claimants resorting to borrowing or investment liquidation.
The report also highlights transparency as the top concern for customers in the Indian health insurance sector. About 73% of those dissatisfied with claim rejections cited unclear reasons, pointing to a communication gap. Customers demanded frequent updates to cashless hospital lists, simpler claims forms, and stronger verification at the time of purchase to avoid surprises later.
Hospitalisation frequency creates a significant gap in customer experience. Those with a single hospitalisation reported a Health Claims Exchange (HCX) score of 84.5, while those with multiple hospitalisations dropped to 73.2, the lowest across all segments. Middle-aged patients (36-40 years) reported a relatively steadier experience, supported by stronger current experience scores and higher intent to continue with health insurance.
The report noted that dense hospital networks alone do not guarantee a better claims experience. Repeated hospitalisation, metro complexity, and higher reimbursement rates tend to lower scores due to the demands of the claims process. The mode of claims is where the burden is most apparent, with cashless claims providing the clearest relief.
As many as 39% of customers asked for stronger verification at the point of purchase, with the South leading at 44% across all regions. Conditions missed during onboarding often become grounds for rejection or a push towards reimbursement. Customers want a transparent, streamlined, and proactive insurance policy and procedure, the report found.
The report suggests that no claim should be closed with vague terms like 'not admissible.' Denials must cite specific clauses and evidence used, and every clause should indicate a clear recourse or appeal option to empower the customer. It recommends that policy buying should be driven by the mandate to verify comprehensively at purchase and honour unconditionally at the claims stage. Industry players should conduct rigorous medical verification upfront; if a condition is not flagged during a comprehensive purchase-time check, it should not be invoked as undisclosed later.
About 39% of customers cited strong verification at purchase as a top improvement to avoid the trauma of later-stage rejection. The report states that cashless remains the easier route for customers, offering reduced upfront burden, simpler paperwork, nearby network hospitals, and faster approval. However, many opt for reimbursement when cashless facility is unavailable, delayed, or not worth waiting for at discharge. This becomes more stressful when the customer has to arrange funds upfront. The trend shows that 76% had to borrow during treatment, up from 68% last year, indicating how a lack of upfront cashless support can quickly create financial strain.
