Mediclaim case-study

CONSUMER AS KING
Insurance firms in dock for loading mediclaim premium
Jehangir B Gai

Subject: Fighting against unjustified loading of Mediclaim premium
Backdrop: Insurance firms willingly accept premium and issue mediclaim policies and renew them year after year. But as soon as you lodge the first claim, their attitude changes. The insured, who was a valued customer, is now a liability. The insurance company either refuses to renew the policy, or attempts to reduce the sum insured, or loads the premium. Such acts are not contemplated under the Mediclaim insurance policies, which only stipulate that in case of a claim there will be a reduction in the “no claim bonus’’.
The Consumer Welfare Association (CWA) took up three such cases before the Consumer Disputes Redressal Forum for South Mumbai District, which has now ruled in favour of the consumer. These judgments, delivered on February 25, should help lakhs of people.
Case Study 1: Amina Sheikh, an octogenarian, was insured for Rs 1.5 lakh for a decade by the National Insurance Co. Ltd. under its Mediclaim Policy. When her policy was due for renewal in 2007, the company increased the premium from Rs 5,305 to Rs 32,787. This was done to make it financially unviable to continue with the policy. Her daughter protested, so the premium was brought down to Rs 23,845, which too was very high. She was forced to pay this premium and renew the policy to avoid a break in insurance. Her daughter wrote to the company demanding an explanation for the arbitrary increase. The divisional manager replied that the policy now stood cancelled as Amina did not seem happy with the firm. He also clarified that the premium doubles
immediately when a person crosses 80 years of age and for her, the premium had been loaded by another 100% in anticipation of claims arising due to advanced age.
CWA then filed a consumer complaint. Rendering the judgment on behalf of the bench, the forum president observed: “Managers of public sector undertakings are dutybound to take decisions based on facts and not in an arbitrary and irresponsible manner based on their emotions.’’
The Forum held that the loading of the premium was arbitrary, unjustified, and contradicted the terms of the policy, which is deficiency in service and unfair trade practice. The forum directed the firm to continue the policy by charging Rs 13,112 and to refund the excess premium collected. It also directed the company to continue renewals
without loading as long as the insured paid regular premium in time. Also, compensation of Rs 15,000 for mental agony and Rs 2,500 as costs were granted.
Case Study 2: In Dr Rupali Shirke’s case, the insurance company loaded her premium by 50%, increasing it from Rs 7,727 to Rs 11,824 and decreased the sum insured from Rs 5 lakh to Rs 2.5 lakh. This was done because of two claims lodged by her, which were genuine and settled by the company. This was considered as an “adverse claims ratio’’ by the firm. When she protested, the insurance firm ignored it.
CWA filed a complaint challenging loading of premium and reduction of the sum insured by United India Insurance Co. Ltd. The Forum held that the firm was bound to renew the policy on the same terms and conditions. It directed the firm to restore the sum insured and charge regular premium without loading. A compensation of Rs 5,000 and costs of Rs 5,000 were also awarded.
Case Study 3: In the case of Hoshang Khan, after a claim was lodged, the insurance firm imposed a loading of 400%, increasing the premium from Rs 10,558 to Rs 55,952. Khan could not afford the high premium, so he sent the premium cheque without the loading, but the insurance company returned it. CWA filed a complaint against United India Insurance Co. Ltd. The Forum held that loading of premium was arbitrary and unjustified. It directed the company to accept the premium without loading. On receipt of the basic premium, the firm was directed renew the policy with retrospective effect from 2006 onwards to maintain the policy’s continuity.
Impact: Insurance companies must realise that Mediclaim policies are for the welfare of the citizens and not for profit.
(The author has won the Govt. of India’s National Youth Award for Consumer Protection. E-mail jehangir_gai@indiatimes.com)