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Premium of senior citizens to be charged on the basis of completed age - Bombay HC

In an order that will benefit hundreds of senior citizens, the Bombay high court has ruled that New India Assurance was wrong in charging premium from existing policy holders as of August 2007 on the basis of running age and not completed age. Hearing a public interest litigation filed by Mumbai resident Dr Babulal Shah, a division bench of Justice Abhay Oka and Justice Girish Kulkarni order NIA to refund the excess amount charged from the petitioner and similarly placed senior citizens along with six per cent interest. The judges also directed the insurance company to shell out Rs 10,000 which will be paid as litigation costs to Shah.

''In case of senior citizens who were holding mediclaim policies as of August 2007, NIA could not have charged premium on the basis of running age while renewing the policy,'' said the judges. The HC pointed out that the Insurance Regulatory and Development Authority (Irda) had not given its approval to NIA to charge on the basis of running age from existing policy holders.

''Therefore, the petitioner and similarly placed senior citizens who were already holding mediclaim policies of NIA as on August 16, 2007 were entitled to renewal by charging the premium on the basis of the completed age on the date on which the renewed policy was issued. Hence, gross illegality had been committed by the insurance company by charging the premium on the basis of the running age of the insured on the date of issue of policy,'' added the judges. The HC said that other similarly places senior citizens have six months time from the publication of its order on the insurance company's website to apply for a refund. NIA will have to refund the excess amount along with the interest within two months.

Shah claimed that he and his wife had a mediclaim policy with NIA since 1998. During the annual renewal of the policy in 2007, they found that there were errors in the age mentioned in the policy, which resulted in a higher premium. On inquiring, they were informed that the company's new policy with effect from August 16, 2007 was to charge premium on the basis running age and not completed age. 

While the insurance company claimed that they had approval for the change, it was pointed out that in its communications IRDA had specified that existing policy holders would not be compelled to change to the new terms if they are prejudicial. 

The insurance company objected to the PIL saying that it was a private contractual dispute. They also said that the court could not go into the issue of fixing premiums. 

Article referred: http://timesofindia.indiatimes.com/city/mumbai/Insurance-company-told-to-refund-money-to-senior-citizens/articleshow/45499786.cms

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