Ernakulam District Commission Holds Oriental Insurance Liable For Deficiency In Service Due To Non-Disclosure Of Policy Terms During The Signing Of The Contract

Brief Facts of the Case

The complainant, a senior citizen, opened a savings account with Punjab National Bank, where he was informed about health insurance coverage provided by Oriental Insurance/opposite party/insurer. Upon visiting the insurer's office and providing details of pre-existing conditions, the complainant requested to port their existing policy, which the insurer agreed to do. Subsequently, policies were issued valid until June 2017. Thereafter, the complainant incurred medical expenses during hospitalization and outpatient treatment, totaling Rs. 95,001. Despite this, the insurer failed to act promptly, violating principles of good faith and natural justice. Additionally, they breached IRDA regulations by not providing the necessary documents to the insured within the prescribed timeframe to change policies. The complainant filed a complaint with the Insurance Ombudsman, but no response was received. Due to these actions, the complainant alleged a deficiency in service under the Consumer Protection Act of 1986, seeking reimbursement of medical expenses, along with compensation for mental anguish and the cost of proceedings.

Contentions of the Opposite Party

The insurer contested the details of the policy mentioned in the complaint and denied knowledge of the complainant's previous treatment and claims. They refuted the complainant's assertion that they had requested to port the policy, stating that porting requires specific procedures laid out by the IRDA. Additionally, the insurer argued that the complainant had suppressed pre-existing conditions when applying for the policy. They highlighted the exclusion period for pre-existing diseases per the policy terms, which had not yet lapsed at the time of the complainant's hospitalization. The insurer emphasized that according to the policy conditions, the insurer is not liable for expenses related to pre-existing health conditions for a period of three years from the inception of the policy.

Observations by the Commission

The Commission observed that the insurer had failed to provide the complainant with the necessary terms and conditions of the policy at the time of enrollment. This failure to furnish vital information is deemed a violation of consumer rights and an example of unfair trade practices. Furthermore, the Commission scrutinized the circumstances surrounding the acquisition of the policy, noting that the dates of opening the account with Punjab National Bank and obtaining the insurance policy from the insurer aligned closely. This alignment suggested a coordinated effort between the bank and the insurer to encourage the complainant to switch policies, potentially without providing adequate information or explanation of terms. Regarding the insurer's denial of the claim based on pre-existing conditions, the Commission deemed it unjustified due to the lack of disclosure of policy terms to the complainant. They highlighted the complainant's assertion that he had not been provided with the terms and conditions before subscribing to the policy, which undermined the insurer's defense. The commission directed the insurer to disburse Rs.95,001 with an interest rate of 7.2% to the complainant, along with Rs.20,000 for unfair trade practices and deficiency of services, as well as Rs. 10,000 towards the cost of the proceedings.

Case Title: K F Francis Vs. M/S Oriental Insurance Co. Ltd.

Case Number: C.C No. 18/459

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