Why should all health insurance claimants face painfully stringent claims processes due to a few fraud cases?

A few days ago, on X, I came across a disturbing account from a doctor treating a patient with an acute slipped disc. The patient needed urgent surgery within 24 hours, but his health insurance company subjected him to a humiliating ordeal. Multiple requests for the same documents, investigators visiting his home, neighbours being questioned about the exact duration of his ailment—all for what should have been a straightforward medical claim. The surgery was delayed whilst clerks with no medical training played detective, apparently more concerned with impressing their supervisers than addressing a genuine medical emergency.

This incident sparked a discussion online. While most responses were rightfully critical of the insurance company’s behaviour, some pointed out a darker reality. Organised fraud gangs have infiltrated the health insurance ecosystem. These criminal networks co-opt hospitals, ambulance services, and other healthcare providers to file fraudulent claims that appear legitimate. The existence of such fraud provides insurance companies with a convenient excuse for their increasingly adversarial approach to genuine claims.

Insurance without obstacles

However, here’s the fundamental issue: health insurance, like so many of society’s basic systems, should simply work. When you’re unwell and need medical care, the last thing you should worry about is whether your insurance company will honour its commitment. The system’s primary function should be to provide healthcare access, not create obstacles.

Unfortunately, what we have instead is a malfunctioning feedback loop, where fraud begets suspicion, suspicion begets harassment, and harassment begets more fraud as genuine customers lose faith in the system. Insurance companies respond to fraud by making the claims process increasingly onerous for everyone. Fraudsters become more sophisticated with their methods. The only people caught in the middle are genuine policyholders who need medical care.

This dysfunction reveals a deeper issue with how we perceive financial systems and accountability. In most well-functioning societies, basic systems like healthcare financing operate on trust by default, with robust mechanisms in place to detect and penalise bad actors. The assumption is that most people are honest and systems should be helpful.

A lesson from banks

Compare this to the way banks operate. Despite the existence of financial fraud, banks don’t subject every customer to invasive questioning when they want to withdraw money. They invest in sophisticated fraud detection systems and work with law enforcement to catch criminals. When fraud is detected, the consequences are severe, but the system remains accessible to honest customers.The health insurance industry could learn from this approach. Instead of treating every claim as potentially fraudulent, companies should invest in more effective detection systems and collaborate more closely with law enforcement. When fraud is discovered, prosecution should be swift and punishment exemplary—both for the fraudsters and for any insurance employees who wrongfully deny legitimate claims.

Penalise delay, protect patient

This brings us to a crucial point about accountability. In any system where powerful institutions interact with individuals, there must be consequences for abuse of power. If insurance companies can delay urgent medical procedures with impunity while hiding behind the excuse of fraud prevention, the system is fundamentally broken. There should be financial penalties for unreasonable claim delays and regulatory oversight that prioritises patient welfare.

The same principle applies to fraudsters. Currently, insurance fraud is often treated as a white-collar crime with minimal consequences. When criminal gangs compromise healthcare delivery for financial gain, they are not just stealing money but undermining trust in a system that people depend on for their lives and health. Punishment should reflect the gravity of this crime.

For individuals navigating this broken system, the practical implications are clear. When choosing health insurance, look beyond premium costs and coverage amounts. Research the company’s claim settlement ratio, average processing time, and customer service reputation. Maintain meticulous records of all medical treatments and cultivate relationships with healthcare providers who are familiar with insurance procedures.

Most importantly, don’t accept unreasonable treatment from insurance companies. If your claim is being processed unreasonably, escalate complaints to the insurance ombudsman, and don’t be afraid to seek legal advice for substantial claims that are wrongfully denied.

The broader lesson extends beyond health insurance to all financial services. Basic systems that people depend on should be designed to work efficiently and fairly. When they fail to do so, we need accountability mechanisms that create real consequences for those who abuse their position, whether they’re defrauding the system or denying legitimate claims.

The Author is CEO, VALUE RESEARCH