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Denying renewal over frequent claims illegal

Ruling against the practice of denying insurance policy renewal to frequent claimants, the high court has held that customers who made claims that were actually excluded from coverage or those who questioned non-payment of claims before a court of law cannot be declined renewal for that reason. Such denial of renewal is "patently illegal", the court said.

Justice Anil K Narendran's order came in response to a petition by N D Prasad of ML Colony at Kunnathumedu in Palakkad questioning New India Assurance Company's decision not to renew his mediclaim policy.

Prasad, a bank employee had obtained a policy after his voluntary retirement in May 2002. It was renewed from time to time until May 2005, when further renewal was declined. In between, he had approached the consumer disputes redressal forum of Palakkad and insurance ombudsman against non-payment of claims.

The insurance company told the HC that in the first year, the petitioner had given an undertaking that he would restrict his claims related

to accidents and not for treatment expenses. However, the petitioner filed a claim for treatment expenses and it was rejected. In the second year, the illness for which the petitioner raised a claim in the first year was included in the list of exclusions, and therefore, another claim for the same illness was turned down that year too. Request for renewal was not entertained due to continuous breach of policy by the insured, the company said.

Ruling against the insurance company, the high court said that the company has no case to substantiate that the petitioner made any bogus claims. The company was not justified in refusing renewal for making claims contrary to the undertaking or the exclusion clause, the court ruled.

"If an insured lodges a claim with the company and the company does not honour the claim, the insured is left with no alternative but to knock at the doors of a court of law.

Merely because the insured had approached the consumer forum for redressal of his grievance, such an act cannot be attributed as a bad record disentitling him to get the policy renewed," the bench held.

 Article referred: http://timesofindia.indiatimes.com/city/kochi/Denying-renewal-over-frequent-claims-illegal/articleshow/42059252.cms

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