V.V. Kumar vs United India Insurance Co. Ltd

V.K.Jain, J

The complainant/petitioner was working as a General Manager with Nagarjuna Fertilizers & Chemicals Ltd. In the year 1991, the above referred company took a Group Medical Insurance Policy from the respondent in respect of its employees and their family members.

The complainants left the employment of the above referred company in February 2003. Before leaving the employment of the company, the complainant had taken a medicare policy from the Yanam Branch of the respondent in the year 2001-2002. The said policy was renewed upto 30.10.2005. The complainant sent a letter dated 03.10.2005 to the respondent for sending the proposal form for renewal of the policy but was informed that in view of very high claim ratio, it had been decided not to renew the policy taken by him. This, according to the respondent, was done towards implementation of measures for loss minimization. Since the policy was not renewed after 30.10.2005, the complainant approached the concerned District Forum by way of a consumer complaint.

The District Forum, vide its order dated 29.12.2006, directed as under:

"The complainant is directed to remit to the 1st opposite party an amount of Rs.21,043/- (total of net premium of Rs.19,095/- which was paid by him for the Mediguard Policy for the previous year 31-10-2004 to 30-10-2005 and service tax of Rs.1,948/-) on or before 8-1-2007 alongwith a covering letter requesting for renewal of Mediguard Policy for one year from 31-10-2005 to 30-10-2006 covering himself, his wife, his daughter and his mother for the same insured sums of Rs.3,20,000/-, Rs.3,00,000/-, Rs.1,65,000/- and Rs.3,30,000/- respectively. The opposite party shall, immediately after receipt of such application from the complainant and remittance of the amount of Rs.21,043/- by him, consider his request for renewal of the Mediguard Policy but it shall be within his discretion to reduce the amount of insurance in respect of the complainant's wife and to demand payment of loaded premium on the amount of insurance of is wife. The 1st opposite party shall prescribe a date for payment of any extra amount payable by the complainant and in case the complainant pays the same, the 1st opposite party shall issue renewal Mediguard Policy accordingly effective from 31-10-2005 to 30-10-2006. In case the complainant does not comply with the direction issued to him above, the question of the 1st opposite party considering request of the complainant to renew the Mediguard Policy does not arise. The opposite parties 2 to 4 shall issue necessary instructions to the 1st opposite party in this regard. The request of the complainant for direction to the opposite parties to pay any damages is refused.

Being aggrieved from the order passed by the District Forum, the complainant approached the concerned State Commission by way of an appeal. The said appeal having been dismissed, he is before this Commission.

It would thus be seen that the individual mediclaim policy was taken by the complainant for the first time from Yanam Branch of the Respondent company in the year 2001-2002 and the said policy was renewed till 2004-2005 when it expired on 30.10.2005.

It is also an admitted position that the complainant wanted renewal of the said policy but considering the claims made by him in the past, the respondent was not willing to renew the policy.

After the order of the District Forum, the complainant sought renewal of the said policy for the period from 31.10.2005 to 30.10.2006 paying a premium of Rs.21,043/-. In response, the insurer proposed to reduce the cover in respect of his wife to Rs.1 lac and also sought a total premium of Rs.1,04,091/- which the complainant was unwilling to pay.

The question as to whether a Public Sector insurance company is justified in denying renewal of a mediclaim policy, came up or the consideration of the Hon'ble Supreme Court in United India Insurance Company Limited Vs. Manubhai Dharmasinhbhai Gajera & Ors. (2008) 10 SCC 404, which interalia held as under:

Each of the aforementioned cases clearly shows that the action on the part of the authorities of the appellant was highly arbitrary. The Respondents though were not entitled to automatic renewal, but indisputably, they were entitled to be treated fairly. We have noticed hereinbefore some of the clauses contained in the prospectus as also the insurance policy. When a policy is cancelled, the conditions precedents therefor must be fulfilled. Some reasons therefor must be assigned.

When an exclusion clause is resorted to, the terms thereof must be given effect to. What was necessary is a pre-existing disease when the cover was inspected for the first time. Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason. The words `incepts for the first time' as contained in clause 4.1 as also the words `continuous and without break' if the renewal premium is paid in time, must be kept in mind as also the reasons for cancellation as contained in clause 7(1)(n) thereof. 50

Renewal of a mediclaim policy subject to just exceptions should ordinarily be made. But the same does not mean that the renewal is automatic. Keeping in view the terms and conditions of the prospectus and the insurance policy, the parties are not required to go into all the formalities. The very fact that the policy contemplates terms for renewal, subject of course to payment of requisite premium, the same cannot be placed at par with a case of first contract.

Having regard to the fact situation obtaining in each case, we are not inclined to exercise our discretionary jurisdiction under Article 136 of the Constitution of India. Before parting with this case, however, we would like to observe that keeping in view the role played by the insurance companies, it is essential that the Regulatory Authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field. The duties and functions of the Regulatory Authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the Central Government or the General Insurance Companies also issue requisite circulars. 51

In view of the above referred binding decision of the Hon'ble Supreme Court, the respondent in my view, was not justified in refusing renewal of the policy or even in seeking a higher premium or reducing the insurance cover in respect of his wife merely because certain claims had in the past, been made by him. A mediclaim policy is taken with a view to have the benefit of an insurance cover in case the insured falls sick and the expenses incurred by him on his treatment are covered under the mediclaim policy taken by him. It would be highly unjust and unfair on the part of an insurer particularly when the insurer is a Public Sector Company, to refuse renewal or to demand a higher premium or reduce the coverage only on account of the claims taken by him in the previous years. The claims made in the previous years were paid only because they were found to be justified and covered under the mediclaim policy taken by the insured. Therefore, availing the benefit of reimbursement admissible in the mediclaim policy, cannot be valid ground for refusing to renew the policy or to demand a higher than the normal premium or to refuse the coverage of the inured.

For the reasons stated hereinabove, the impugned order cannot be sustained and are liable to set aside.

The next question which arises for consideration is that considering the time period which has already lapsed since mediclaim policy expired on 30.10.2005, what would be the fair and reasonable order to be passed in the facts and circumstances of this case. In my view, the insurer should issue a mediclaim policy to the complainant, to the extent the coverage is desired by him, charging the normal premium payable in the year 2019-2020 for the said coverage. The complainant is permitted to convey the amount for which mediclaim cover is desired by him to the insurer within one week from today. On receipt of such intimation, the insurer shall convey to him the normal premium payable on the coverage desired by him, for the year 2019-2020. The premium payable by him shall be conveyed to him within one week of receiving the intimation from him. The complainant has already made payment of Rs.21,000/- to the insurer. If any additional amount is found payable by him in terms of this order, he shall pay the same within one week of receiving the demand from the insurer. The mediclaim policy will be issued within one week of the payment of the balance premium, if any. Subject to the complainant complying with the direction given to him hereinabove, the insurance policy will be applicable with effect from the date of this order, for a period of one year and the complainant/petitioner will be entitled to seek its renewal from time to time as per the relevant rules including the guidelines issued by IRDA. While complying with this order, the petitioner/complainant shall be permitted to provide his present residential address to the insurer and the policy will be sent at that address. The respondent shall also pay a sum of Rs.25,000/- as the cost of litigation to the complainant/petitioner, within four weeks from today. The revision petition stands disposed of.