Insurer Finding "Loopholes" To Deny Claims Under 'Corona Rakshak Policy' Unfair Trade Practice: Kerala Consumer Forum Orders Compensation

The Consumer Disputes Redressal Commission at Ernakulam recently awarded a sum of Rs. 1,20,000/- as compensation to a policy holder whose claim under the 'Corona Rakshak Policy' was rejected by M/S Star Health and Allied Insurance on the ground that the policy holder had not provided treatment records for bronchial asthma. 

The Bench comprising President D.B. Binu, and Members V. Ramachandran and Sreevidhia T.N. was of the view that the complainant policy holder's Bronchial Asthma condition had not been definitively diagnosed, and the rejection of the claim on that ground alone would amount to an Unfair Trade Practice. 

"The 'Corona Rakshak Policy' was crafted with heartfelt intent to offer solace and support to those battling the harrowing effects of COVID- 19. The insurance company's denial, after perusing the documents, feels like a betrayal of the principles of compassion and fairness. Such a cold and narrow-minded approach, rooted in technicalities, is deeply hurtful, especially during a time when the entire world was grappling with the shock of the pandemic. It's heart wrenching to see some of the insurance firms repeatedly dismiss claims on insubstantial grounds or mere technicalities. Their focus should be on empathy rather than loopholes. Imagine the despair of a man, shaken by the devastating impact of COVID- 19, who sought refuge in the security of a policy, only to be turned away. Think of the countless souls who, while mourning the loss of loved ones or battling the virus themselves, reached out to insurance companies for help, only to be given a myriad of reasons for denial. Such actions are not just unfair; they are profoundly inhumane," the Bench observed.

The complainant had purchased the 'Covid Rakshak' policy from the Opposite Party for an amount of Rs. 1Lakh. The policy entitled the policy holder to a lump sum benefit equal to 100% of the sum insured if they were diagnosed with COVID-19 and required hospitalization for at least 72 hours. 

Pursuant to the complainant's hospitalization following his diagnosis of COVID-19, he filed a claim with the Opposite Party insurance company for reimbursement. The latter however, rejected his claim citing his failure to provide consultation papers, investigation reports, and treatment details related to bronchial asthma. 

The complainant's application before the Insurance Ombudsman was also rejected, while granting permission to seek redressal through other forums or courts. 

It is at this juncture that the complainant approached the Commission seeking the refund of the claim amount of Rs. 1Lakh, alongwith 12% annual interest from the claim date until realization. He also sought Rs. 10,000/- as compensation for the mental agony, financial hardships, and suffering caused by the unjust rejection of the claim policy. 

The Opposite Party on its part emphasized that the complainant had availed the Policy for a specified period and sum insured, with the terms and conditions clearly stipulated therein.

The Opposite Party averred that the complainant had a history of Bronchial Asthma, Hypertension, and other conditions before the policy inception, which were not disclosed in the proposal form, and that it was the complainant's refusal to provide the requisite documents pertaining to the same which led to the rejection of the complainant's claim. It thus sought the dismissal of the complaint. 

The Commission noted that since the complainant's condition of Bronchial Asthma had only been indicated and not diagnosed, he may not have been fully aware of the same, and the rejection of the claim could thus be seen as Unfair Trade Practice by the Opposite Party Insurance Company. 

"The opposite party's insistence on obtaining unrelated medical records of bronchial asthma, which is unrelated to the claim, is unjustified and amounts to an unfair trade practice and a deficiency in service," it observed. 

The Commission thus ordered the Opposite Party to refund the claim amount to the complainant, and further directed to pay Rs. 20,000/- as compensation for the mental agony, financial hardships, and suffering caused by the unjust rejection of the claim, as well as towards the cost of proceedings. 

Counsel for the Complainant: Advocate Tom Joseph 

Counsel for the Opposite Party: Advocates R.S. Kalkura, Harish Gopinath, and Najmal Hussain

Case Title: K.R. Prasad v. M/S Star Health and Allied Insurance Co. Ltd. 

Case Number: C.C. No. 403/ 2021

Click Here To Read/Download The Order