Insurer Cannot Repudiate Insurance Claim Based On Non-Disclosure After Issuing Policy: NCDRC Holds Care Health Insurance Liable For Deficiency In Service

Brief Facts of the Case

The complainant purchased an international medical health insurance policy from Care Health Insurance/insurer, paying a premium of Rs.17,864. While in Australia, the complainant experienced chest pain, underwent tests and a stent procedure, and later received further treatment, including another stent placement. The complainant's claim for cashless benefits under the policy was rejected due to non-disclosure of pre-existing conditions, Coronary Artery Disease (CAD), and Dyslipidemia. Consequently, the complainant paid hospital bills totaling 31,499 Australian Dollars. Upon returning to India, the complainant submitted a claim for reimbursement, which was again rejected for the same reason. The complainant then filed a consumer complaint before the District Commission, which dismissed the complaint. The complainant then appealed to the State Commission, which allowed the complaint and directed the insurer to pay the entire claim amount to the complainant at an interest rate of 9%, along with Rs. 50,000 as compensation and Rs. 25,000 as the cost of litigation. Aggrieved by the state commission's order, the insurer filed a revision petition before the National Commission.

Contentions of the Insurer

The insurer argued that the State Commission made an error by stating that the insurer should have conducted mandatory medical tests on the complainant, given his history of high blood pressure, especially considering his age. The insurer claimed it was the complainant's responsibility to disclose all pre-existing conditions and that the insurer cannot be required to conduct medical tests for every insured individual. It was argued that the complainant was responsible for accurately completing the proposal form to ensure proper risk assessment. The insurer also contended that the interest awarded by the State Commission was too high and should not exceed 6%, per the Supreme Court's guidance. The compensation for harassment and litigation expenses was deemed arbitrary and erroneous, and the default interest rate of 12% per annum was considered excessive and incorrect.

Observations by the National Commission

The National Commission observed that while the complainant failed to fill in certain columns regarding disease in the insurance proposal form, he did disclose a history of high blood pressure for the past 5 years. Despite this disclosure, the insurer issued the insurance policy upon receiving the premium. The commission emphasized that even if any column was left blank, the insurer could have requested the complainant to fill it, especially considering the complainant declared having a pre-existing disease (PED) of blood pressure for 5 years. The commission further observed that this was a fit case where the insurer should have opted for getting a medical examination done before issuing the policy, given the complainant was above 60 years old, had blood pressure for 5 years, declared having at least one of the listed pre-existing diseases, and it was an overseas mediclaim policy. The commission highlighted that it cannot be treated as suppression of material fact by the complainant, as he specifically answered 'yes' to having a pre-existing disease, though he did not tick the relevant column(s). The commission noted that by accepting the premium and issuing the policy despite the blank columns, the insurer could not later repudiate the claim based on alleged suppression or non-disclosure by the complainant. The commission placed reliance on the Supreme Court judgment in Manmohan Nanda v. United India Assurance Co. Ltd., where it was observed that the insurer must seek details regarding the medical condition of the proposer and assess risks before issuing the policy. Once issued after assessing the medical condition, the insurer cannot repudiate the claim based on a disclosed existing condition 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 up, and if it issues the policy despite blanks, it cannot later claim suppression and repudiate.

The National Commission did not find any merits in the petition and accordingly dismissed it while upholding the state commission's order.

Case Title: Care Health Insurance Limited Vs. Harjinder Singh Sohal

Case Number: R.P. No. 563/2022