Internal vs External Insurance Appeal: Which One Is Right for You?

You've been denied. Now: should you appeal to the insurance company again, or skip straight to the independent reviewer?

This guide walks you through internal vs. external appeals, when to use each, and when to skip the internal and go external.

What's an Internal Appeal?

An internal appeal is you asking the insurer to reconsider their decision.

Process:

1. You submit appeal to the insurer
2. Insurer reviews (usually someone different from the first reviewer)
3. Insurer issues a decision (approve, deny, or partially approve)
4. You get a written explanation

Timeline: Usually 20-30 days (varies by country).

Pros:

• Required before external review in most places
• Insurer might approve (they sometimes make mistakes)
• Faster if they approve
• Less formal than external review

Cons:

• Insurer still has financial incentive to deny
• Same company judging itself
• Takes time if they deny again

What's an External Appeal?

An external appeal is sending your case to an independent, impartial reviewer who's not the insurer.

Process:

1. You lodge complaint with the external reviewer (ombudsman, regulator, etc.)
2. External reviewer contacts the insurer for their response
3. External reviewer investigates independently
4. External reviewer issues a decision (binding on the insurer, usually)

Timeline: Usually 30-90 days (varies by country and complexity).

Pros:

• Independent—not the insurer
• Often faster and more impartial
• Frequently overturns internal denials
• Binding on the insurer (usually)

Cons:

• Takes longer than internal appeal
• Some countries require internal first
• Slightly more formal process

Should You Do Internal First, or Skip to External?

Required Internal First

Most countries legally require you to appeal internally before escalating to external review.

Countries with mandatory internal appeal:

• USA (required before external review)
• UK (8 weeks internal first)
• Australia (30 days IDR first)
• Canada (30 days internal first)
• Singapore (internal appeal first)
• Malaysia (internal appeal first)
• Hong Kong (internal complaint first)

If mandatory in your country, do it. But understand: it's often worth doing even if optional.

Optional Internal First

A few situations allow you to skip internal and go straight to external:

When external is better:

• Insurer is clearly wrong (strong evidence you have)
• Insurer has a pattern of bad denials (you've heard from others)
• Internal process seems designed to stall
• You can't wait 30 days

But even then: Doing internal first usually helps because it:

• Creates a record the insurer reviewed
• Gives the insurer a chance to self-correct (some do)
• Strengthens external appeal (shows you tried everything)

Strategy: When to Appeal Internally vs. Skip to External

Do Internal Appeal If:

• It's required in your country
• You have time (not urgent)
• Your case is borderline (internal reviewer might approve)
• You want to preserve all options
• You want to give the insurer a chance

Consider Skipping Internal If:

• Your case is clear-cut and insurer is obviously wrong
• You're in urgent medical need
• The insurer has a known pattern of wrongful denials
• You have previous rejections from the same insurer on similar issues
• The country allows direct external appeal (some do)

The Timing Question

If you do internal first, then external, total time is:

• Internal: 30 days
• External: 30-90 days
• Total: 3-4 months

If you skip internal and go straight external:

• External: 30-90 days
• Total: 1-3 months (faster)

But: if internal approval happens, external is avoided entirely.

Decision: Is 3-month internal appeals process worth a 50-50 chance of approval?

For most people: yes, do internal first. Many insurers do reverse internally once they see complete evidence.

What Changes Between Internal and External?

Internal Appeal to Insurer

The same company is reviewing. What changes?

Best case: Different reviewer, fresh eyes, complete evidence you submitted changes the decision.

Realistic case: Same decision as before.

Red flag case: They deny again with worse reasoning.

What to do: Submit stronger evidence. Get your doctor's letter if you didn't before. Cite guidelines. Request peer-to-peer review.

External Review Organizations by Country

Know who your external reviewer is before you appeal.

United States:

• IROs (Independent Review Organizations) for ACA plans
• ERISA external review for employer plans
• State Insurance Commissioner

United Kingdom:

• Financial Ombudsman Service (FOS)
• Contact: financial-ombudsman.org.uk

Australia:

• AFCA (Australian Financial Complaints Authority)
• Contact: afca.org.au

Canada:

• OLHI (OmbudService for Life and Health Insurance)
• Contact: olhi.ca
• Provincial regulators (vary by province)

Singapore:

• FIDReC (Financial Industry Disputes Resolution Centre)
• Contact: fidredc.org.sg

Malaysia:

• BNMLINK or OmbudsFin (OFS)
• Contact: bnmlink.bnm.gov.my or ombudsfin.org.my

Hong Kong:

• IARB (Insurance Appeals Tribunal)
• Contact: iarb.org.hk

New Zealand:

• FSCL (Financial Services Complaints Ltd)
• Contact: fscl.org.nz

Ireland:

• FSPO (Financial Services and Pensions Ombudsman)
• Contact: fspo.ie

Research yours now. Know exactly where to escalate.

Strategic Differences: Internal vs. External

In Internal Appeal

You're appealing to the company that denied you. They're motivated to:

• Avoid admitting error
• Save money
• Minimize liability
• Keep you out of external review

What this means: They might approve if your case is actually strong (they want to avoid external scrutiny).

Your strategy: Make your case very strong. Complete evidence. Clear argument. Peer-to-peer review request.

In External Appeal

You're appealing to an independent reviewer. They're motivated to:

• Make fair decisions
• Follow the law and regulations
• Be impartial
• Investigate thoroughly

What this means: You might win even if the insurer denies internally.

Your strategy: Same as internal (strong evidence), but external reviewers often give more weight to your doctor's judgment vs. the insurer's reviewer.

When External Overturn Rates Are Highest

External reviewers overturn internal denials most often when:

• Medical necessity is denied but guidelines support it
• Pre-existing condition exclusion was unfairly applied
• Insurer didn't follow their own process
• Information was missing in the internal review
• Insurer based decision on cost, not medical evidence

If your case fits these, external review is likely to help.

Red Flags: When to Skip Internal and Go External

Don't waste time with internal appeal if:

• Insurer's decision is legally wrong (clear violation of the law)
• You're in medical crisis (urgent review available externally)
• The insurer has a pattern (multiple wrongful denials you've seen)
• The denial is on appeal (you've already appealed internally, been rejected, and want external)

In these cases, go external immediately.

How to Decide: Flowchart

Is internal appeal required in my country?
├─ YES → Do internal appeal
│        └─ Approved? DONE
│        └─ Rejected? Go to external review
└─ NO → Ask: Do I have time for internal?
        ├─ YES, 30+ days available → Do internal appeal
        │                           └─ Approved? DONE
        │                           └─ Rejected? Go external
        └─ NO, urgent situation → Go straight to external review

The Numbers: What You Should Expect

Internal appeals:

• Approval rate: 10-30% (varies by condition, insurer, strength of appeal)
• These are the cases where the insurer truly erred

External reviews:

• Overturn rate: 30-60% (varies by external body and case type)
• Much higher than internal appeal approval

This suggests external review is more impartial than internal.

What to Include in External Appeal

You're not submitting a new complaint. You're escalating the case.

Include:

• Internal appeal decision letter (most important)
• Your original internal appeal letter
• Denial letter from insurer
• All supporting evidence
• Brief explanation of why the internal decision was wrong

External reviewers have the internal file. You're just adding your escalation request.

Timeline Strategy

Aggressive timeline (urgent case):

1. Denial → appeal internally (request expedited/urgent review)
2. Internal decision → escalate to external immediately (request urgent review)
3. External decision → complain if still denied (to regulator) Total: 5-10 days possible (urgent pathway only)

Normal timeline (non-urgent):

1. Denial → appeal internally (30 days)
2. Internal decision → escalate to external (30-60 days)
3. External decision → consider legal action if needed Total: 3-4 months typical

When Both Internal and External Are Worth It

Do both if:

• Your claim value is high (10,000+)
• You have time
• You have strong evidence
• You want to maximize approval chances

Most people should do both anyway since external is often required.

Key Takeaway

• Internal appeals: Do them (usually required). Many insurers approve with complete evidence.
• External review: Go here if internal rejects. Independent reviewers overturn denials regularly.
• Total process: 3-4 months typical, but faster paths exist for urgent cases.

Don't stop at internal rejection. Keep going.

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Disclaimer: ClaimBack provides AI-generated appeal assistance for informational purposes only. ClaimBack is not a law firm and does not provide legal advice. Always review your appeal letter before sending and consider professional advice for complex or high-value claims. Regulatory processes vary — always verify current procedures with your insurer or regulator.

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