A Legal Operation Theatre

The SC’s Rulings

• Renewal means repetition of the original policy...on the same terms and conditions as that of the original policy. (2001)
• Mediclaim can’t be denied for pre-existing diseases. (2008)
• If renewal is applied for in time, the company is bound to renew as per rules. (2009)
• Don’t believe insurance company when it says renewal is up to 70 years or is discretionary. (’09)
• When information on a specific object is sought by the insurance firm, customer must make true and full disclosure. (’09)

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Pending innovation from industry, courts as well as consumer forums are finding “creative solutions”. In 2007, the SC ruled that mediclaim policies must be renewed with the same terms and conditions every year, and that diseases contracted after insurance cover was taken cannot be excluded. This order was delivered after a man who had purchased a policy in 1999 was asked to renew it in 2004, but with an exclusion—heart disease—because he had suffered a heart attack the previous year.

This should have taken care of things once and for all, but the fine print tends to keep unravelling. Y.G. Muralidharan, a consumer rights advocate in Bangalore, says that he has noticed some insurance policies specify the number of beds in a hospital to ensure a successful claim. “Customers rarely know how many beds a hospital has. Besides, why deny dispensary visits coverage? Patients claiming insurance are forced to be hospitalised, leading to overcharging, and the current mess,” he says.

Again the courts stepped in—to say that emergency care should be provided, cashless, to insured persons, in any hospital. But the exclusions and denials continue—such as of disabled people or the aged on grounds that they have pre-existing conditions or are too risky to insure. Poonam Natarajan, chairperson of the National Trust for Welfare of People with Disabilities—which has designed and sponsored a number of insurance schemes, and builds legal capacity for insurance—avers that to get health insurance (particularly for anyone with disability) schemes must be underwritten; the government must bear the costs. “Though we had to struggle to get the first such scheme, ‘Nirmaya’, introduced, it does seem that options are wider today,” she says.

In fact, court rulings have played a key role. In 2008, the SC ruled that insurance companies, particularly in the public sector, couldn’t refuse to provide medical cover on grounds of a pre-existing disease. H.K. Awasthi, legal head, VOICE, a consumer advocacy group, says the way insurers define “pre-existing diseases” is incorrect. “Something that happened to a person a decade ago, and was treated, cannot be used to exclude treatment today... though an insurance firm does have the discretion to insure or not,” he says.

If anything, the flood of consumer complaints—on internet forums, in district, consumer and state high courts, with ngos, the ombudsmen and those seemingly intractable cases that knock on the SC’s door—indicate that people want insurance, but they also desperately want it to work.