The National Commission for the Resolution of Consumer Disputes, headed by Dr. Inder Jit Singh, held that the insurer has a duty to seek full details regarding the medical condition of the insured and assess the risks before issuing the insurance policy. If the insurer issues the policy after the insured has disclosed existing medical conditions, even if some columns are left blank, the insurer cannot later reject the claim citing non-disclosure.
Brief facts of the case
The appellant purchased an international medical health insurance policy from Care Health Insurance/insurer, paying a premium of Rs.17,864. While in Australia, the appellant experienced chest pain, underwent tests and a stent procedure and later received further treatment, including another stent placement. Claimant’s claim for non-cash benefits under the policy was denied due to non-disclosure of pre-existing conditions, coronary artery disease (CAD) and dyslipidemia. Consequently, the appellant paid hospital bills totaling A$31,499. After returning to India, the complainant submitted a claim for refund, which was again rejected for the same reason. The complainant then filed a consumer complaint with the District Commission, which dismissed the complaint. The appellant then appealed to the State Commission, which allowed the appeal and directed the insurer to pay the entire claim amount to the appellant at the rate of 9% interest, along with Rs. 50,000 as compensation and Rs. 25,000 as cost of litigation. Aggrieved by the order of the state commission, the insurer filed a revision petition before the National Commission.
Claims of the Insurer
The insurer argued that the State Commission erred in stating that the insurer should have conducted mandatory medical tests on the appellant, given his history of high blood pressure, especially considering his age. The insurer contended that it was the appellant’s responsibility to disclose all pre-existing conditions and that the insurer cannot be required to conduct medical tests on every insured individual. It was argued that the appellant was responsible for correctly completing the proposal form to ensure the correct risk assessment. The insurer also claimed that the interest awarded by the State Commission was too high and should not exceed 6%, as per the Supreme Court’s directive. Compensation for harassment and court costs was considered arbitrary and erroneous, and the late interest rate of 12% per annum was considered excessive and incorrect.
Observations from NAtIONAL Commission
The National Commission observed that while the appellant did not fill in some disease-related columns in the insurance proposal form, he disclosed a history of high blood pressure for the past 5 years. Despite this disclosure, the insurer issued the insurance policy upon receipt of the premium. The Commission pointed out that even if any column was left blank, the insurer could have asked the complainant to fill it, especially considering that the complainant has declared that he has a pre-existing disease (PED) of blood pressure for 5 years. The Commission further observed that this was a suitable case where the insurer should have chosen to conduct a medical examination before issuing the policy, as the complainant was above 60 years of age, had blood pressure for 5 years, stating that he had at least one listed pre-existing conditions and was an overseas medical claims policy. The Commission pointed out that it cannot be treated as suppression of material fact by the complainant as he specifically answered ‘yes’ to having a pre-existing disease, although he did not tick the relevant column(s). The Commission noted that by accepting the premium and issuing the policy regardless of the blank columns, the insurer could not later reject the claim based on alleged deletion or non-disclosure by the complainant. The Commission relied on the decision of the Supreme Court in Manmohan Nanda v. United India Assurance Co . Ltd., where it was observed that the insurer must seek details regarding the health condition of the proposer and assess the risks before issuing the policy. Once issued following a medical assessment, the insurer cannot deny the claim based on a pre-existing condition discovered that led to the claim. The Supreme Court observed that if any column is left blank, the insurer must ask the insured to fill it, and if it issues the policy despite the blanks, it cannot later claim suppression and rejection.
The National Commission found no merit in the petition and accordingly dismissed it upholding the order of the State Commission.
Case Title: Health Care Limited Vs. Harjinder Singh Sohal
Case number: RP No. 563/2022
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