In a landmark ruling strengthening consumer rights, the Bengaluru South (Ramanagara) District Consumer Disputes Redressal Commission has held that insurance companies cannot reject genuine health insurance claims on trivial or technical grounds. Oriental Insurance Company had to settle a health insurance claim that was denied by the Commission for a two-month delay in premium payment during the COVID-19 pandemic.
The case was filed by Srinivas (58), a customer of Punjab National Bank, who in 2018 had been regularly paying premiums under a ₹5 lakh health insurance policy. In 2021, he filed a claim of ₹33,000 to cover the cost of his wife’s uterus surgery.
But the insurance company denied such a claim, saying the premium was paid two months late during the COVID-19 period. Srinivas approached the Consumer Commission and raised the issue of deficiency in service and unfair trade practices.
After examining the evidence and hearing both sides, the Commission ruled in favour of the complainant.
The Bench, composed of Presiding Officer Renukadevi Deshpande and Member Latha M.S., said the insurer's action was a deficiency in service and was an unfair trade practice. The Commission also said that denying a genuine medical claim for a small delay in the payment of premium in the case of the COVID-19 pandemic was unjustifiable.
Accordingly, the Commission directed Oriental Insurance to pay the ₹33,000 medical claim within 30 days.
Besides the claim amount, the Commission ordered the insurer to pay 6% annual interest from February 16, 2021, until the amount is realized.
The order also orders the company to compensate the complainant for expenses incurred for medicines, travel, nursing care, food, and other treatment-related costs, as well as compensation for mental agony, physical hardship, and litigation expenses.
The ruling is likely to be a landmark for policyholders who lost on a basic procedural or technical basis during the COVID-19 pandemic, and not just for policyholders.
The judgment is also consistent with the principle that insurance companies should act fairly and reasonably in the processing of genuine claims, consumer rights experts say. They say policyholders who feel they have been wrongfully denied can seek redress in consumer forums.
We also believe it is the responsibility of insurers to consider the larger picture with respect to premium payments and not to rely solely on technical grounds to reject legitimate claims.
The Commission's order is viewed as a significant step towards ensuring greater accountability in the insurance sector and stronger protection for consumers who depend on health insurance during medical emergencies.
