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Mumbai: Non-life and health insurers processed a record number of health insurance claims in FY25, lifting settlement ratios and cutting repudiations, even as average payouts per claim declined amid wider policy coverage and rising use of cashless treatment.
Insurers settled about 87%-or 32.6 million-claims registered during FY25 compared with 83% in FY24, showed data from the Insurance Regulatory and Development Authority of India‘s (Irdai) annual report.
The share of repudiated claims fell to around 8% from about 11% a year earlier, while pending claims eased to roughly 5% from 6% as of March-end, pointing to faster processing and tighter oversight of claim decisions.
Total payouts rose to ₹94,248 crore in FY25 from ₹83,493 crore the previous year.
But the average amount paid per claim, however, declined to ₹28,910 from ₹31,086, given a larger proportion of lower-ticket claims as retail and group health insurance penetration expanded.
Cashless settlement continued to dominate claims payments. About 66.35% of the total claim amount in FY25 was paid through the cashless route, largely unchanged from 66.17% in 2023-24, with the higher ticket size of hospital-based cashless treatments. Reimbursement claims accounted for about 29.34% of payouts, down from 31.35% a year earlier, while around 3% of claims were settled through a combination of both modes.
The improvement came with the regulator pushing the industry towards faster and more transparent settlements. The General Insurance Council has stepped up efforts to expand cashless coverage by working toward common hospital empanelment, negotiating reasonable treatment rates.
During the year, Irdai mandated insurers to work toward 100% cashless claim processing, with strict timelines requiring pre-authorisation within one hour and discharge approvals within three hours. The regulator had said that any delays must be borne by insurers from shareholders’ funds. Also, the regulator had tightened governance around repudiations, requiring all rejections to be cleared by either a product management committee or a claims review committee.
Third-party administrators continued to handle the bulk of claims, though their share declined modestly. In FY25, about 69% of claims by number were settled through TPAs, down from 72% in the previous year, while in-house settlement rose to 31% from 28%, as insurers continued to invest in internal claims capabilities.
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