You won a claim battle but your health insurer canceled your policy—here’s what you should do

“I had undergone a precautionary heart scan in 2006.

Nothing

significant came up in the report and no treatment ever happened.

I happened to mention it to the treating doctor when I got hospitalised in May 2023 for an open heart surgery.

The insurer rejected my claim [for the surgery] and cancelled the policy saying that I hid a pre-existing disease.

But I had no heart ailment when I bought the policy in 2015,” said Lamba, who runs an IT hardware and software sales business in New Delhi.

(Who retired from an IT hardware and ….)

Lamba’s insurer reimbursed him for the surgery after the insurance ombudsman ruled in his favour, but cancelled his policy.

“My operation happened in May 2023.

They cancelled my claim and policy in June 2023.

I received my claim in April 2024.

I’ve been chasing them to renew my policy since then, but no luck so far,” he said.

Health insurers cannot deny a claim on grounds of non-disclosure of pre-existing diseases if a policy has run continuously for at least five years, except in cases of fraud or deliberate misrepresentation.

But Lamba, who says he didn’t have any heart-related ailments when he took the policy in 2015, isn’t alone in such run-ins with health insurers.

“We have been receiving a lot of such cases where despite claims (being approved) by the ombudsman, cancelled policies don’t get reinstated,” said Shilpa Arora, co-founder and chief operating officer of Insurance Samadhan, an insurance grievance redressal platform.

Meerut-based Azhar Ahmed, 33, had a similar experience.

He bought a health insurance policy for his family in 2022 and was hospitalised in 2024 for kidney stones.

“One of the hospital documents mentioned that I had [kidney stones] since 2007.

No such discussion ever happened with anyone in the hospital.

It was a clerical error which the treating doctor clarified to the insurer, but the insurer still rejected the claim and cancelled the policy,” said Ahmed.

Following the insurance ombudsman’s mediation, Ahmed accepted a reimbursement of ₹40,000 against expenses of about ₹70,000.

“I accepted the lesser amount because I was told the policy will get renewed, but the award did not mention it.

I approached the insurer to renew my policy after I received the claims amount in July 2025, but they said they will not do it,” said Ahmed.

Cancellation and a renewal

It can be tough for an individual to get a new health insurance policy after a major surgery.

Insurers tend to be reluctant to cover such individuals.

Moreover, a policyholder would have to serve a fresh waiting period for pre-existing or certain diseases to be covered under a new policy.

“Once the ombudsman issues an award for the payment of a claim rejected on grounds of misrepresentation of facts or fraud, the consequential cancellation of policy or denial of renewal should be revoked automatically,” Manocha said.

Tripura-based Raju Bhowmik, 46, a vice principal at a government school, had a somewhat different experience.

Like with Lamba and Ahmed, his health insurer rejected his claim on grounds of non-disclosure of a pre-existing disease.

The insurance ombudsman overturned the decision and explicitly directed the insurer to renew Bhowmik’s policy.

“…

respondent insurer has no right to cancel the policy and the same should be renewed by them from the due date of renewal with all accrued benefits and credits,” the ombudsman stated in its ruling.

The insurer did comply—but only after 55 days of the award being issued.

The claim amount, however, was paid within 30 days, as required.

Insurers are required to comply with an ombudsman award within 30 days of receiving it.

If they fail to do so, they must pay a penalty of ₹5,000 per day to the complainant for each day of delay.

Queries sent to leading insurance companies remained unanswered.

Ombudsmen: Each to their own

India has 17 insurance ombudsman offices, according to the Insurance Ombudsman Annual Report FY24, the latest available.

However, each office follows its own procedure to resolve complaints.

There is no standardisation in how awards are written or structured, said experts.

Atul Jerath, former insurance ombudsman of Chandigarh, explained that outcomes often depend on how comprehensively a complaint is framed.

“If a complainant had brought up both issues—denial of claim and policy cancellation—at the same time, the ombudsman would have taken note of it in the award.

The complaint before the ombudsman would have been for denial of claim, which was adjudicated upon.

Had the renewal issue been flagged, the ombudsman would have given the award accordingly,” Jerath said.

If an ombudsman’s ruling doesn’t address a health insurance policy’s cancellation or non-renewal, a policyholder has no option but to again approach the insurer or file a fresh complaint with the ombudsman.

“There is no provision in ombudsman rules to review or revise already issued awards except for typographical errors.

So, if renewal is denied after an award, the complainant must go back to the ombudsman,” Jerath said.

“During my tenure, if a complainant raised this issue, I would take the insurer’s consent to renew the policy and incorporate it in the award itself.”

Another inconsistency lies in interest payment for delayed claim settlements.

Bhowmik received interest on the delayed period for his insurance claim to be settled.

He had filed his claim on 25 July 2023, and the ombudsman directed the insurer to pay interest at 8.25% per annum on the claim amount from 25 August 2023 onwards in the award issued on 9 March 2025.

But Ahmed and Lamba did not receive any interest payout.

But the Insurance Regulatory and Development Authority of India does mention insurance payouts in Regulation 14(2)(ii) of the IRDA (Protection of Policyholders’ Interests) Regulations, 2017: “In case of delay in the payment of a claim, the insurer shall be liable to pay interest at a rate which is 2% above the bank rate prevalent at the beginning of the financial year in which the claim is reviewed.”

Despite this, not all ombudsman offices invoke the clause, leaving many policyholders unaware of their entitlement.

“Unnecessary claim rejections impose a financial burden on policyholders, who must first arrange funds for hospitalisation and then fight for reimbursement,” said Arora of Insurance Samadhan.

“It takes months to get the claim approved.

Irdai should make it mandatory for all ombudsman offices to include the interest clause in their awards.”

Such consistency could help reduce grievances, she added.

“RBI (Reserve Bank of India) already implements this.

Banks have to pay additional compensation when cases are resolved at the RBI ombudsman.

The penalty provision already exists in Irdai regulations—it simply needs better implementation.”