Buying health insurance? One overlooked document can tell you what brochures won’t

I recently saw a legal drama where one side buries the other under a huge volume of documents, the unstated purpose being to hide the file. Each insurer publishes over 200 pages of dense information over the year. This information, while very useful for different stakeholders, can make it difficult for a general reader to find the page that is most relevant to buying their own health insurance.

Think about the common-sense questions you should ask before buying health cover. What does the policy cover and what does it cost? Do most claims get paid? Do policyholders complain frequently? Is buying a policy for the first time straightforward? And do most customers renew it?

Much of this information is available in Schedule NL-47 of insurers' annual public disclosures. Unlike many other disclosures that aggregate company-wide data across all businesses, NL-47 reports information product by product, allowing buyers to assess the specific policy they are considering.

Beyond brochures

The easiest information to access is coverage and pricing. Insurers explain these in product brochures, advisors typically provide comparisons, and policy wordings contain the full details for those willing to read them.

Pay particular attention to exclusions and waiting periods. The regulator has standardized policy definitions and mandated features such as lifelong renewability, creating a strong minimum standard across the industry.

Claims reality

NL-47 reports the claim settlement rate for each product—the percentage of claims that are paid.

Settlement rates can vary significantly even across products offered by the same insurer. Buyers should ideally choose plans that settle more than 90% of claims. Up to 10% of rejected claims may arise from legitimate reasons, such as outpatient (OPD) expenses being claimed under policies that do not cover them or claims relating to pre-existing diseases filed before waiting periods have expired.

Among the products of one standalone health insurer, claim settlement rates ranged from about 92% to 97%.

Another useful metric is the incurred claims ratio (ICR)—claims paid as a proportion of premiums collected. A ratio above 100% could indicate future premium increases or greater scrutiny of claims. Conversely, a ratio significantly below 100% may suggest either relatively high premiums or lower claim payouts.

For the same insurer, incurred claims ratios ranged from 52% to 107% across individual products. When selecting a health plan, a claim settlement rate above 90%, combined with an incurred claims ratio that is neither excessively high nor unusually low, offers greater comfort.

NL-47 also reports product-wise complaint data. In addition, insurers publish company-wide grievance statistics, while the Insurance Ombudsman releases annual insurer-wise complaint data.

When comparing insurers, focus on complaint rates rather than absolute complaint numbers. Larger insurers naturally receive more complaints because they sell far more policies. One large insurer recorded more than 20,000 complaints simply because it has the biggest customer base, while a much smaller insurer received only a few dozen.

Complaint rates can also vary considerably between products offered by the same insurer. The grievance rate for an insurer's best-performing products may be only one-third that of its weakest offerings.

Renewal signals

Some important aspects of the buying experience remain outside the scope of public disclosures. For example, insurers do not report how long they take to issue policies, how frequently they decline proposals, or how often they load premiums because of medical conditions.

To understand these aspects, speak with people who have purchased the specific policy you are considering and consult your advisor, who is likely to have enough experience with multiple insurers to know which companies are efficient and reasonable.

NL-47 has also addressed another important information gap by reporting renewal behaviour product by product.

It shows the percentage of policies renewed out of those due for renewal, along with an age-wise distribution indicating how many policies have remained in force for one year, three years, five years and beyond.

High renewal rates and a meaningful proportion of long-standing policies suggest customers continue to find value in the product.

For one leading insurer, renewal rates ranged from about 87% to 95% across products. The age-wise distribution provides further insight. One widely sold product had roughly 4.5 lakh active policies, including nearly two lakh that had remained in force for five to ten years and almost 30,000 that were more than a decade old—a strong indication that customers continue renewing the policy over time.

Need more transparency

Insurer disclosures have improved steadily, but a few additional steps by the Insurance Regulatory and Development Authority of India would make them even more useful for consumers.

The regulator should require insurers to include the key NL-47 metrics directly in product prospectuses so buyers do not have to search through annual reports. Publishing NL-47 every six months instead of annually would also make the information more current.

Finally, the Insurance Ombudsman should restore publication of its detailed individual awards. A transparent dispute resolution system should have the confidence to make such decisions publicly available.

Returning to the legal drama, the winning side succeeded because it found the one page that mattered.

For health insurance buyers, there is no need to sift through hundreds of pages. NL-47, mandated by the Irdai and available on every insurer's website, provides many of the answers buyers need. Read it for the product you intend to purchase—and ask your advisor to help fill in the remaining gaps.

Note: This content is purely editorial and for educational purposes only. It is not influenced by any commercial arrangement, product partnership, or business objective of the platform. Content powered by Mint is editorial and independent of the app’s commercial services. As such transactions, products and liabilities remain separate.

Kapil Mehta is co-founder of SecureNow Insurance Broker.

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