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Multiple policies no ground to reject mediclaim renewal: HC

The Bombay high court recently slammed United India Insurance Company Ltd for refusing to renew a cancer patient's policy and held that renewal of health insurance policies cannot be declined on an arbitrary ground that a person holds multiple policies. The court said there is no bar on the number of insurance policies a person can have.''

 The court said the firm's denial was on "preposterous grounds" of suppression of illness when there was a clear disclosure by the policy holder. The HC held that if a complainant does not accept the Ombudsman's award, the insurance company doesn't have any discretion to implement it. Rejecting renewal on such recommendation is "flawed", the HC held.
"The renewal of a mediclaim policy cannot lie at the whim and caprice of the insurer," said a bench of Justices D Y Chandrachud and S C Gupte last month. Kalyani, a bank employee, and her husband Avinash Gokhale had filed a petition in the HC last year and again this year to challenge a decision by United India Insurance declining the renewal of their health insurance cover. There were two group insurance policies and a top up medicare policy. A 2006 agreement between the Bank of Maharashtra and United India Insurance offered a group mediclaim cover under a scheme called Mahabank Swasthya Yojna for account holders aged up to 65 and family. Renewals were permitted till age 80. Gokhale took a policy in 2006 for Rs 5 lakh and it was renewed several times.
The coverage of risk under the policy was to be in addition to any other policy held by the account-holder either with the same firm or any other insurance firm, observed the HC bench. But if there was more than one policy, a claim was liable only in ratable proportion.
In February 2009, Avinash Gokhale was detected to be suffering from colon cancer. In April, his wife applied for the cover and disclosed his hospitalisation details for a surgery he underwent in March. The policy was renewed for 2010-11. In September 2010, the firm ny restricted disbursement of claim amount of Rs 1.5 lakh. Gokhale approached the Insurance Ombudsman. In September 2011, the Ombudsman asked the firm not to renew Gokhale's policy after April 2012 and said the policy ought to have a clause that cancer would be covered only after three years of continuous coverage and the maximum cover should be Rs 5 lakh to obviate need for multiple policies.
The bank, acting on the Ombudsman's order, declined renewal on the grounds that the family had taken multiple policies by changing the proposer's name.
In March 2012, the bank issued a circular for group mediclaim policy for its officers, which would cover all pre-existing diseases. Kalyani and her husband took the policy too, but in July, the insurance firm deleted Avinash's name, citing the previous pending dispute. The company also refused to renew the family's 'super top up medicare policy' last August citing "multiple policies".
The HC, after hearing advocate Gaurav Joshi as amicus curiae (friend of court) and the company's counsel A S Vadyarthi, held that there was a "full disclosure" by Gokhale but the issue was whether or not the insurance company was justified in declining to grant renewal. The court said the renewal has to be decided on "fair and cogent" reasoning and "not arbitrarily".

 Article referred: http://articles.economictimes.indiatimes.com/2013-09-15/news/42083768_1_insurance-ombudsman-medicare-policy-insurance-firm

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