In a major verdict, the Ernakulam Consumer Disputes Redressal Commission in Kerala has held a general insurance company and a bank that facilitated insurance coverage accountable for denial of medical insurance claim to a customer and directed them to pay a compensation of ₹2.23 lakh.
The commission, comprising president D.B. Binu and members V. Ramachandran and Sreevidhia T.N., issued the verdict on a petition filed by a husband-wife duo from Thevara, Milton and Eva Milton, against Cholamandalam MS General Insurance Company and the Union Bank of India.
The complainants alleged that they were denied claim and had to meet medical expenses to the tune of ₹1.49 lakh out of their own pocket after Mr. Milton had to undergo coronary angioplasty on August 22, 2020.
On its part, the insurance company argued that the treatment was not covered as it was related to a pre-existing condition (diabetes mellitus) which is only covered two years from the commencement of the policy whereas the policy was only five months old at the time of treatment.
The bank defended itself from any responsibility arguing that it was not involved in the terms and conditions of the insurance policies and has no financial liability in settling claims. It also backed the insurance company’s reasoning for denying the claim and further argued that insurance services were “a mere value-added service” offered to customers at subsidised rates.
Supreme Court ruling cited
While ruling in favour of the petitioners, the commission cited a Supreme Court ruling that diabetes mellitus, while a risk factor for cardiac ailments, does not automatically predispose every individual with the condition to heart disease.
“This precedent underscores the necessity for insurers to assess claims based on the specific circumstances of each case rather than applying broad exclusionary principles. The denial of their claim on the grounds of a pre-existing condition, therefore, appears to be based on a broad interpretation of policy which contradicts the principles of fairness and transparency that underpin insurance contracts,” the commission observed.
Furthermore, the denial of cashless treatment and the subsequent claim rejection seem to be predicated more on policy technicalities than on a fair assessment of the complainant’s medical emergency and the disclosures made at the time of policy purchase, it said.
