Delhi High Court has ruled against an insurance firm that rejected the medi-claim of a person, by stating contractual conditions.
The ruling further stressed that discriminatory exemption cluses of insurance polies need to be done away with.
Why was the claim denied?
The insurance claims of a person with a rare heart condition was rejected by the United India Insurance Company.
This was because the heart condition was due to a genetic disorder, which isn’t covered under the policy.
Notably, insurance policies sold to individuals invariably contain a plethora of exclusions in the fine print, which diminishing their practical value.
By its very nature, such exclusion defeats the purpose of the health policy and tilt the balance heavily in favour of the insurer firms.
What was the Delhi high court’s ruling?
When the case was taken to the Delhi high court, it ruled against the insurance firm, and stated that the rejection of the claim was discriminatory.
The court has held that exclusions cannot be unreasonable or based on a broad parameter such as genetic disposition or heritage.
The order hence upheld the insurance claim made, and noted that the case can’t be seen merely as a contractual issue.
Rather, it has reasoned this as an extention of the ‘right to health’ as derived form the Article 21 (Right to life) in the Constitution.
Further, it was noted that ‘right to health’ is meaningful only with the right to health care, and by extension, health insurance required to access it.
It also called for the elimination of all other arbitrary exemption clauses in insurance schemes to curtail people’s rights.
What is the significance of the ruling?
This judgement is indeed a significant one and the central government and the Insurance Regulatory and Development Authority (IRDAI), should heed to it.
They must review all the policies, and eliminate unreasonable exclusionary clauses designed to avoid claims.
Notably, the government has already stated its intent in proceding aheadf with a universal “National Health Protection Scheme”.
How does the insurance landscape look in India?
Several studies have pointed out that health insurance in India suffers from lack of scale, and presently covers only about 29% of the households.
Even among those within the insurance bracket, the coverage is only limited and the health-care system also lacks regulation of costs.
Also, there is an information asymmetry, and the insured member is usually unable to assess the real scope of the policy.
These highlight the need for stronger regulations within the health insurance and hospital sectors in India.
What is the way forward?
This is a necessity to define costs, curb frauds and empower patients.
Insurance law has to be revisited to ensure that there is a guaranteed renewal of policies, and that age is no bar for entry.
It needs to be ensured that pre-existing conditions are uniformly covered.
State sponsored insurance that is universal in coverage (which is envisioned in the long-term) could help in addressing the problems of exclusion.
As a short-term priority, it is important to remove discriminatory clauses in policies and expand coverage to as many people as possible.
