If your health insurer is sitting on a genuine hospital claim and refusing either to pay it or to formally reject it, only hinting that "something looks suspicious", that conduct is itself legally questionable. An insurer cannot keep a bona fide mediclaim hanging indefinitely on unverified suspicion. It must either settle the claim or repudiate it with clear, recorded reasons within a defined time. Where it does neither, that silence or stalling can amount to a deficiency in service, for which a policyholder has real remedies.
This explainer walks an ordinary policyholder through exactly what the regulator requires of an insurer, the hard timelines that now apply, why "delaying mediclaim settlement" on mere suspicion is not allowed, and the practical steps to take. It is general information, not legal advice.
Key takeaway. Once you have made a claim, the insurer has only three lawful options: settle it, repudiate it with specific written reasons tied to the policy terms, or pay it late with penal interest. There is no fourth option called "keep it under investigation". Every day the file sits in limbo is a day the insurer is accumulating exposure, not avoiding it.
What "suspicion" means versus a real, provable defence
There is an important difference between an insurer suspecting fraud and an insurer proving a valid ground to reject a claim. A health insurance contract allows the company to decline payment only on specific recognised grounds: a genuine pre-existing disease that was concealed, a material misrepresentation in the proposal form, a policy exclusion, an unexpired waiting period, or established fraud. Each of these has to be established with evidence, not merely asserted.
Suspicion is not a defence. If the insurer believes the hospitalisation was fabricated, the bills inflated, or the disease pre-existing, the burden is on it to investigate promptly and put its reasons in writing. It cannot use a vague "claim under investigation" tag as a parking slot to avoid both paying and rejecting, sometimes for months, in the hope that the policyholder gives up.
What an insurer must actually establish before it can decline a claim.
The recognised grounds
A concealed pre-existing disease, a material misrepresentation in the proposal form, a policy exclusion, an unexpired waiting period, or established fraud.
Proof, not assertion
Each of those grounds has to be established with evidence. An insurer that merely asserts one has not made out a defence to the claim.
Suspicion is not a defence
If the insurer believes the bills were inflated or the disease pre-existing, the burden is on it to investigate promptly and put its reasons in writing.
The clocks an insurer is actually on
Health and general insurers in India operate under regulations framed by the Insurance Regulatory and Development Authority of India under the Insurance Act, 1938 and the IRDA Act, 1999. The controlling instrument today is the IRDAI Master Circular on Protection of Policyholders' Interests, 2024 (Ref. IRDAI/PP&GR/CIR/MISC/117/9/2024, dated 5 September 2024), read with the IRDAI (Protection of Policyholders' Interests, Operations and Allied Matters of Insurers) Regulations, 2024.
These are not vague aspirations. They are specific, quotable numbers.
| Stage of the claim | Time the insurer is allowed | What happens if it is breached |
|---|---|---|
| Decision on a request for cashless authorisation | Immediately, and in no case more than one hour from receipt of the request | Regulatory breach; grievance and Ombudsman routes open |
| Final authorisation for discharge from hospital | Within three hours of the hospital's discharge authorisation request | Any additional amount the hospital charges for the delay must be borne by the insurer from its shareholders' fund, not by you |
| Settlement of a health claim other than cashless (reimbursement) | Within fifteen days from submission of the claim | Interest at bank rate plus two percent from the date of intimation until payment |
| Death of the policyholder during treatment | Claim settlement to be processed immediately, and the mortal remains released from the hospital immediately | Regulatory breach; a serious aggravating factor before a consumer commission |
| Repudiation of a claim | Only with approval of the Product Management Committee or its three-member Claims Review Committee | An unapproved or unreasoned repudiation is challengeable on that ground alone |
Two features of that framework deserve emphasis because insurers rarely volunteer them.
First, the interest for delay is payable suo motu. The circular says the insurer shall pay it of its own motion along with the claim amount. You do not have to ask for it, and you certainly do not have to litigate for it. If a delayed settlement lands in your account without interest, that is a fresh grievance.
Second, the document burden has shifted. The circular provides that insurers and Third Party Administrators shall collect the required documents from the hospitals, and that the policyholder shall not be required to submit them. It also states that no claim shall be rejected or closed for want of documents or for delayed intimation of the claim.
Common mistake. Accepting the line that "your claim is on hold because we are waiting for documents from you". Under the 2024 master circular the insurer and its TPA are the ones obliged to collect documents from the hospital, and a claim cannot be rejected or closed for want of documents or for late intimation. If you are being run in circles between the TPA and the hospital, put that in writing to the Grievance Redressal Officer and quote the circular. The tone of the conversation changes immediately.
The sixty-month moratorium: the strongest card most policyholders never play
If your policy has been running for a while, the single most important provision in the 2024 master circular may be the moratorium. It provides that no policy and no claim of health insurance shall be contestable on any ground of non-disclosure or misrepresentation, except for established fraud, after the completion of the moratorium period, that is 60 months of continuous coverage. Credits accrued under ported and migrated policies count towards that period.
Read that carefully, because it disposes of the most common stalling tactic outright. After five years of continuous cover, "you did not disclose your diabetes in the proposal form" is no longer available to the insurer. Only established fraud is, and establishing fraud is a considerably higher bar than raising a suspicion of it. If your policy, including its ported predecessor, has run continuously for more than sixty months, say so in your first written representation and ask the insurer to confirm in writing that it is not seeking to contest the policy on a ground it has lost.
Consumer law: delay and unjustified repudiation as deficiency in service
A policyholder is a consumer who has paid for a service. Section 2(11) of the Consumer Protection Act, 2019 defines "deficiency" as any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance which is required to be maintained by or under any law in force, or which has been undertaken to be performed under a contract. It expressly includes any act of negligence, omission or commission causing loss or injury, and the deliberate withholding of relevant information from the consumer.
That definition fits an insurer that misses the regulator's timelines, that withholds the real reason for a delay, or that repudiates without recorded reasons. The consumer commissions can direct the insurer to pay the claim amount, interest, compensation for harassment, and litigation costs.
Where you file depends on value. Under the Act as enacted, the District Commission entertains complaints where the value of the services paid as consideration does not exceed one crore rupees, the State Commission above one crore and up to ten crore, and the National Commission above ten crore. Each of those provisions carries a proviso allowing the Central Government to prescribe a different value, so confirm the threshold in force on the date you file. Complaints can be filed and tracked online through e-Jagriti, the Ministry of Consumer Affairs platform.
Deadline warning. Section 69 of the Consumer Protection Act, 2019 bars a commission from admitting a complaint unless it is filed within two years from the date on which the cause of action arose. Delay can be condoned under Section 69(2) only if you satisfy the commission that there was sufficient cause, and the commission must record its reasons for condoning it. Do not let a claim drift for two years while the insurer promises that the file is "with the investigation team". Fix the cause of action by demanding a written decision, and start counting from there.
Contract, civil and criminal law
A policy is a contract. Repudiating or stalling without a valid, contractually permitted reason is a breach, and a policyholder may sue in a civil court. For most individuals the consumer commission is faster and cheaper, and the Insurance Ombudsman is faster still.
If an insurer genuinely uncovers a fabricated claim, its remedy is to act under the criminal law. Cheating now sits in Section 318 of the Bharatiya Nyaya Sanhita, 2023, which replaced Sections 415 and 417 to 420 of the Indian Penal Code, 1860, and forgery in Section 336 BNS, replacing Sections 463 and 465 IPC. Criminal procedure is now the Bharatiya Nagarik Suraksha Sanhita, 2023, so what was a complaint under the Code of Criminal Procedure, 1973 is now made under the corresponding BNSS provision. The point for a policyholder is this: suspicion must translate either into lawful repudiation with reasons or into a lawful criminal complaint. It cannot translate into endless limbo.
Settle, reject, or pay interest, but do not just sit on it
| Insurer's options on a genuine claim | Is it lawful? | What it requires |
|---|---|---|
| Settle and pay within the regulatory timeline | Yes | Payment to the policyholder or the hospital within the prescribed period |
| Repudiate the claim | Yes, if justified | Claims Review Committee approval, plus written communication giving full details with reference to the specific policy terms relied on |
| Pay late with penal interest | Yes, but it is a breach | Interest at bank rate plus two percent from intimation to payment, paid of the insurer's own motion |
| Keep the claim "under investigation" indefinitely on suspicion | No | This is the conduct the framework disallows |
What delay actually costs the insurer
Stalling is not consequence-free for the company. A consumer commission can order:
- The claim amount in full, where the repudiation or delay was unjustified.
- Interest on the delayed amount, commonly from the date the claim should have been settled.
- Compensation for mental agony and harassment, particularly where the delay forced the patient or the family to arrange funds during a medical emergency.
- Costs of the litigation.
Separately, the regulatory consequences bite independently: the excess hospital charge caused by a discharge delay beyond three hours comes out of the shareholders' fund, and the penal interest is not something the insurer can negotiate away.
What a delay can end up costing the insurer, head by head.
The claim amount
A consumer commission can order the claim amount in full where the repudiation or the delay was unjustified.
Interest on the delay
Interest on the delayed amount, commonly from the date the claim should have been settled. The regulatory rate is bank rate plus two percent, payable of the insurer's own motion.
Compensation and costs
Compensation for mental agony and harassment, particularly where the delay forced the family to arrange funds during a medical emergency, plus the costs of the litigation.
The shareholders' fund
Excess hospital charges caused by a discharge delay beyond three hours come out of the insurer's shareholders' fund, and that consequence bites independently of any consumer case.
What to do if your mediclaim is being delayed on suspicion
- Pin the insurer to a written position. Send an email and a registered-post letter asking it either to settle or to formally repudiate, with reasons referable to specific policy clauses, within a stated reasonable time. Ask expressly whether the file has gone to the Claims Review Committee. This converts vague verbal stalling into a documented demand and fixes your cause of action.
- Ask the right questions in that letter. The date the last document was received; the specific clause relied on; whether the policy has crossed the sixty-month moratorium; and confirmation that penal interest at bank rate plus two percent will be paid suo motu if the timeline has been missed.
- Escalate to the Grievance Redressal Officer. Every insurer must have one, and the contact details must be published. Keep the acknowledgement and the complaint reference number.
- Approach the Insurance Ombudsman. This is a free forum for policyholder disputes under the Insurance Ombudsman Rules, 2017, and Rule 17(3) caps an award at fifty lakh rupees, which covers the overwhelming majority of health claims. No lawyer is required. Awards are binding on the insurer.
- File a consumer complaint. If the delay or rejection remains unjustified, file before the District, State or National Commission according to value, through e-Jagriti or physically. Claim the amount, interest, compensation and costs.
- Consider a regulatory complaint in parallel. A complaint to IRDAI's grievance mechanism does not decide your claim, but a documented pattern of missed timelines is useful evidence before the Ombudsman or the commission.
Documents to keep ready
| Document | Why it matters |
|---|---|
| Policy document and premium receipts, including for earlier ported policies | Proves valid, in-force cover and establishes continuous coverage for the sixty-month moratorium |
| Claim form and acknowledgement | Fixes the date of intimation and of submission, from which the fifteen-day clock and the interest run |
| Hospital records, discharge summary, bills | Establishes the genuineness of the treatment |
| All correspondence with the insurer and the TPA | Shows the delay and any shifting reasons, which is the heart of a deficiency case |
| Proposal form copy | Counters false allegations of non-disclosure |
| Cashless request and discharge authorisation timestamps | Proves breach of the one-hour and three-hour requirements |
Costs and timelines for the policyholder
- Written representation and grievance escalation: free, and you can do it yourself.
- Insurance Ombudsman: free. No court fee, no lawyer needed. Decisions commonly take about three to six months.
- Consumer commission: a modest fee scaled to the claim value. District Commission matters commonly take about one to two years, and longer where the insurer appeals.
- Professional fees, if you choose to be represented before a consumer commission in Bengaluru, typically run from about twenty thousand to sixty thousand rupees depending on the value and complexity.
Mistakes that weaken a good claim
- Arguing on the phone. Nothing said on a call exists. Put it in writing, every time.
- Accepting a partial settlement without a written reservation. If you accept a reduced amount in full and final settlement without protest, you make the balance harder to recover.
- Waiting for the insurer to "come back to you". The two-year limitation under Section 69 runs whether or not the insurer replies.
- Not pinning the date the last document was received. The fifteen-day clock runs from submission of the claim, so the date matters.
- Forgetting earlier ported policies when counting the sixty-month moratorium. Accrued credits from ported and migrated policies count.
- Failing to ask for interest. It is payable of the insurer's own motion, but that does not mean it will be paid without a reminder.
If your insurer is stalling, our consumer protection law practice explains how we help policyholders pursue deficiency-in-service claims.
Frequently Asked Questions
Can an insurer reject my mediclaim only because it suspects fraud?
No. Suspicion alone is not a valid ground. Under the IRDAI Master Circular on Protection of Policyholders' Interests, 2024, a claim cannot be repudiated without the approval of the Product Management Committee or its Claims Review Committee, and the rejection must be communicated with full details referring to the specific terms and conditions of the policy.
How long can an insurer take to settle a health insurance claim?
A claim other than cashless must be settled within fifteen days from submission. A request for cashless authorisation must be decided immediately and in no case beyond one hour, and final authorisation for discharge must be granted within three hours of the hospital's request.
What happens if the insurer delays my discharge?
If final authorisation takes more than three hours, any additional amount the hospital charges on account of the delay must be borne by the insurer out of its shareholders' fund. The circular also states that in no case shall the policyholder be made to wait to be discharged.
Will I get interest if my claim is paid late?
Yes. Where the claim is not settled within the specified timelines, the claimant is entitled to interest at the bank rate plus two percent from the date of receipt of intimation until the date of payment, and the insurer is required to pay it of its own motion along with the claim amount.
The TPA says my claim is stuck because documents are missing. Is that a valid reason?
Generally not. The circular requires insurers and TPAs to collect the required documents from the hospital and states that the policyholder shall not be required to submit them. It also provides that no claim shall be rejected or closed for want of documents or for delayed intimation.
My policy is eight years old and the insurer is alleging non-disclosure. Can it do that?
After the moratorium period of sixty months of continuous coverage, no health insurance policy or claim is contestable on any ground of non-disclosure or misrepresentation, except for established fraud. Credits from ported and migrated policies count towards the sixty months.
What is "deficiency in service" in an insurance dispute?
Section 2(11) of the Consumer Protection Act, 2019 defines deficiency as any fault, imperfection, shortcoming or inadequacy in the quality, nature and manner of performance required by law or undertaken under a contract, and includes negligence and the deliberate withholding of relevant information. Unjustified delay or arbitrary rejection fits that definition.
Where do I complain about a delayed mediclaim?
First the insurer's Grievance Redressal Officer, then the Insurance Ombudsman, which is free and can award up to fifty lakh rupees under Rule 17(3) of the Insurance Ombudsman Rules, 2017, and then or instead the District, State or National Consumer Commission depending on the value, filed through e-Jagriti.
Is there a time limit to file a consumer complaint?
Yes. Section 69 of the Consumer Protection Act, 2019 requires the complaint to be filed within two years from the date the cause of action arose, with delay condonable only on sufficient cause recorded in writing.
Does the insurer have to tell me why it rejected my claim?
Yes. Where a claim is repudiated, rejected or partly disallowed, the details must be communicated to the claimant with full particulars referring to the specific terms and conditions of the policy document. An unexplained or shifting rejection is challengeable on that ground alone.
Can I claim compensation for the harassment of being made to wait?
Yes. Consumer commissions can award compensation for mental agony and harassment in addition to the claim amount, interest and costs, particularly where the delay struck during a medical emergency.
This article is for general informational purposes only and does not constitute legal advice. Laws change and every situation is different; please consult a qualified advocate about your specific matter.
