In a move aimed at improving health insurance penetration and public trust, the Centre is planning to mandate faster processing times for cashless claims. According to sources, insurers may soon be required to approve cashless authorisation requests within one hour and settle final claims within three hours.
The proposal is part of broader insurance sector reforms, aligned with the Insurance Regulatory and Development Authority of India’s (IRDAI) vision to ensure affordable insurance for all citizens by 2047. These changes are expected to simplify claim processing and make the system more user-friendly.
A professional agency may also be brought in to design standardised and simplified claim and application forms. The aim is to make the process less intimidating and more accessible to the average policyholder, ensuring smoother and faster settlements.
“The idea is to have BIS-type standards in the insurance sector,” an official said, referring to the Bureau of Indian Standards, to ensure uniformity and efficiency.
The urgency of reform is underscored by a sharp rise in outstanding insurance claims. IRDAI data reveals pending claims have climbed to 25 million as of March 2024—up from 17.5 million in 2023 and 8.5 million in 2022.
Meanwhile, India’s healthcare spending remains low by global standards. According to WHO, the country’s healthcare expenditure as a share of GDP is behind nations like Brazil, Nepal, Sri Lanka, and Thailand.
Despite marginal improvements in insurance metrics—penetration rose from 3.9% in 2013–14 to 4% in 2022–23, and insurance density increased from $52 to $92—the overall coverage remains limited.
Experts have welcomed the proposed reforms. Shashwat Alok, associate professor of finance at ISB, noted that quicker approvals can build consumer confidence, increase coverage, and help insurers price products better. However, he stressed that success hinges on holding insurers and hospitals accountable, and ensuring broader awareness and affordability.
