Why an approved insurance claim may still take time to reach your bank account

Getting an insurance claim approved may feel like the final hurdle, but policyholders may still have to wait before the approved amount reaches their bank account.

The period between approval and payment can involve several checks, including confirmation of the final payable amount, completion of pending paperwork, verification of beneficiary and bank details and processing of the payment. The exact procedure depends on the type of insurance and the nature of the claim.

In some cases, hospitals, third-party administrators (TPAs), surveyors, repairers and lenders may also have a role in completing the settlement.

Narendra Bharindwal, president of the Insurance Brokers Association of India (IBAI), told CNBC-TV18 that insurers generally have to confirm the amount payable, complete outstanding documentation and verify the policyholder or beneficiary and bank account details before releasing the money.

Why can an approved claim face delays?

An approval does not necessarily eliminate documentation or verification issues.

Bharindwal told CNBC-TV18 that discrepancies in KYC or bank details, differences in names or account information, pending discharge or consent documents and beneficiary verification can hold up payments.

The process can become more complicated when other parties are involved. Hospitals, TPAs, surveyors or repairers may need to submit information or complete their respective formalities before an insurer can release the claim amount.

The final settlement can also differ from the initially expected amount because of policy conditions. Ankita Srivastava, general manager – Growth & Strategy at THIP Insure, told CNBC-TV18 that deductibles, co-payments and policy limits can affect the amount ultimately payable.

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For reimbursement claims, she said, insurers may seek additional information if the submitted bills or invoices do not fully correspond with expenses covered under the policy.

Large general insurance claims involving financed assets can face another layer of checks.

Health insurance claims work differently

Health insurance claims generally fall into two categories: cashless and reimbursement.

Under a cashless arrangement, the insurer pays the approved amount directly to the hospital. In a reimbursement claim, the policyholder initially pays the medical expenses and later submits the relevant documents for assessment and settlement.

After the claim is registered, the insurer examines the submitted records and checks whether the treatment falls within the policy’s coverage, taking into account waiting periods, exclusions and other conditions.

Once approved, the admissible amount is worked out after factoring in deductibles, co-payments and expenses that are not covered by the policy.

How can policyholders avoid unnecessary delays?

Complete and consistent documentation is one of the simplest ways policyholders can reduce delays.

Digitalisation is also helping streamline the process. Online claim registration, electronic document submission, e-KYC, automated verification, claim tracking and electronic payments are reducing dependence on physical paperwork.

Greater digitalisation and straight-through processing could further reduce friction in insurance claim settlements, experts said. They added that the shift from physical payment instruments to electronic transfers such as NEFT and RTGS has also helped shorten the time taken for payments to reach policyholders’ bank accounts.

However, going digital does not eliminate the need for accurate documentation. Experts said complete and correct information remains essential even when the entire claim process is handled online.

For health insurance, experts said insurers are required to communicate cashless pre-authorisation decisions within one hour, provide discharge authorisation within three hours of receiving a hospital’s request, and settle eligible reimbursement claims within 15 days of receiving all necessary documents.