Insurer cannot arbitrarily refuse policy renewal

Healthcare is costlier than a stay in a five-star hotel. Clearly, it is beyond the means of the common man. One-time hospitalization can wipe out a lifetime's savings. So, mediclaim policy, as a welfare measure to bring the cost of decent healthcare within the reach of the average citizen, was introduced. Yet, insurance companies, which willingly accept premium year after year, are reluctant to settle legitimate claims. They look for excuses to reject these.

Often, insurers arbitrarily refuse to renew a policy, when it becomes evident that the claims ratio would go up. This, clearly, is not permissible, as held by the Supreme Court in the case of Biman Krishna Bose versus United India Insurance & Anr.

Biman Bose and his wife, Alka, had a mediclaim policy with United India Insurance. Alka fell ill, and was hospitalised. After discharge, a claim was made for reimbursement of expenses, amounting to Rs 8,243. Although all the necessary documents were submitted, yet even this meagre claim was not settled. This, despite repeated reminders.

So, the insured filed a complaint before the Kolkata district consumer forum. The ding-dong legal battle spanned four years and four tiers of courts till the Supreme Court finally intervened, directing the insurer to pay the claim, as also awarding Rs 20,000.

One would have expected the matter to have concluded here. But, unfortunately, when the policy became due for renewal, the insurer refused to renew in vengeance.

Once again, the insured felt compelled to take legal action. A writ petition was filed in the Calcutta high court, and the second round of battle ensued.

The High Court allowed the writ, set aside the insurer’s refusal, and directed the policy be renewed.

The insurer, however, contended the policy had lapsed, as, during litigation, the renewal premium had not been paid. So, the division bench, while agreeing with the view taken by the single judge, directed the insured to subscribe to a new policy, holding that renewal was not possible.

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This order defeated the very purpose of litigation, because, in case a fresh policy is taken, all pre-existing diseases are excluded. Also, claims in respect of certain diseases contracted within the first 30 days of the new policy are excluded. So, Bose appealed to the Supreme Court (SC).

The SC observed the insurer is bound to act fairly and reasonably. Renewal cannot be refused on irrelevant and extraneous considerations, or in an arbitrary manner. Refusal to renew merely because the insured had approached the courts against the rejection of the claim is not justified.

The SC further observed the initial renewal premium had been paid by the insured, but wasn’t acknowledged by the insurer. Even during the intervening years of litigation, there arose no occasion to deposit the premium.

Accordingly, it held the refusal to renew as unfair and arbitrary, and directed the policy be renewed from the date it fell due for renewal.

It also ordered to further renew the policies for the subsequent expired years, if the premium had been paid. The insured was also awarded costs of Rs 5,000.

Since then, the SC has now held that refusal to renew a policy amounts to victimisation, unfair practice, and high-handededness.

Mediclaim, motor insurance portability shortly

Insurance regulator IRDA on Tuesday said that mediclaim policy holders, who are not satisfied with the services, will soon be able to switch service providers at the same premium. The same would also be true for motor insurance policy holders. "It is high time that the insurance industry also moves to offer portability so that the mediclaim and motor insurance policy holders can switch their service provider...We have initiated a debate on the idea of portability and we would be arriving at a conclusion very soon," IRDA Chairman J Hari Narayan said at CII insurance summit.

To a question on whether this portability concept would apply to ULIPs also, he said: "Yes and no. Yes in the sense that there has to be a balance in the churn of ULIP's policy and their portfolio has to be evenly managed."
Narayan, however, added that portability cannot be randomly applied and the portfolio of an insurance company has to be balanced.
To a question on the status of Reliance General Insurance acquiring a south-based insurance company, he said: "We have certain issues which we are trying to resolve through discussions."
The IRDA chief added that work is progressing on formulating merger and acquisition norms for the sector.
"M&A norms would be announced soon. A committee is studying the issue," Narayan said.

Hospital corpse to clarify position on cashless medical insurance

The Association of Hospitals, which represents most private hospitals in the city, will on Wednesday simplify its stand on the issue of cashless medical insurance. Many insurance holders had been left in the pitch as public sector insurance companies had determined to limit cashless mediclaim policies to only those hospitals that characteristic in the favorite Provider Network list drawn up by them.
This covered only 81 hospitals in Mumbai.
The public sector companies had done this saying the hospitals were billing patients advanced if they came under mediclaim.
The companies want hospitals to stay to a set of standard rates for surgeries and medicines.
“Hospitals are being asked to conduct bypass surgeries for Rs 1.8 lakh, which is not likely in a city like Mumbai,” said General Vijay Krishna, chief executive officer (CEO) of Breach Candy Hospital, who is a member of the association.
“The insurance companies are also saying they will buy equipment and medicines straight and give to them hospitals,” he added.
“This is just not practical. If we need some equipment immediately, will we have to wait till it is sent to us.”
“The insurance companies should have held a discussion with us before making such decisions. We have not been given a consideration,” he added.

New India Assurance plans small-premium mediclaim cover

New India Assurance Company, the market chief in the general insurance sector, plans to launch by the end of 2010-11 a low-premium health insurance policy for the masses, according to its Chairman and Managing Director, Mr M. Ramadoss.
The planned mediclaim policy, expected to be one of the lowest priced in the market, would cover a selected number of diseases and also contain the number of hospitals from which the policyholders can avail themselves of the medical services, Mr Ramadoss said.
The insurer plans to file the policy with the Insurance Regulatory and Development Authority in a month.
“The whole idea is to carry down the premium rates by restricting the choices to the insured,” Mr Ramadoss said on the sidelines of a seminar organized by the Confederation of Indian Industry here. The policyholders in this case would be given a list of hospitals for availing themselves of the medical services and the policy might cover a selected 51 common diseases, he pointed out.
“At present, the standard annual premium rate for a mediclaim policy is Rs 1,000 for a sum insured of Rs 1 lakh. We wish to bring down the rates in the new policy to the sub-thousand levels,” he said. The sum insured for the policy may be Rs 1 lakh or more, he added.
He, however, maintained that the policy was still in the scheming stage and the financials for the same were not yet frozen.
He said .It also planned to launch a new motor insurance policy in 2010-11 and would look at revising upwards the prices of some of its existing health insurance products.
The Gross Direct Premium Income (GDPI) of the company from Indian operations may increase to Rs 6,000 crore in 2009-10, up from Rs 5,200 crore in 2008-09. Its GDPI from 23 branches located abroad will increase from Rs 1,000 crore last financial to Rs 1,250 crore in 2009-10, he pointed out.
He added. The general insurance sector was estimated to grow at 10-11 per cent this fiscal with the GDPI collected by all the companies expected to exceed Rs 34,000 crore.

Oriental insurance to launch new schemes

Public sector general insurer Oriental Insurance Company on Thursday said it is planning to launch four new schemes including two health insurance schemes.

Oriental Insurance Company Chairman M Rama doss said. "We have filed offer documents for four new schemes with the regulator, He said " These include two health insurance plans, including overseas mediclaim and two motor vehicle insurance schemes,. The company is awaiting IRDA approval, he said, adding, Oriental currently offers 160 schemes under different segments.

Meanwhile, the company launched a portal offering customers to buy policies online. He said, "From today onwards customers can get vehicle insurance, personal accident cover, householder's insurance online and even claims can be developed through the portal,"

He claimed, With the launch of the portal, Oriental Insurance became the first public sector general insurance company to offer this facility to the customers.

The portal is included with the company's core insurance system and it would enable the various stakeholders of the company to get real time information about their policies, claims and grievance, he said.

Insurance cos push for uniform hospital rates

In a move to control health cover costs, insurance companies are bargaining hard with hospitals for a standard rate card. Market leader New India Assurance has told corporate customers that cashless repayment will be only to the point of the negotiated price and if any policyholder goes to a hospital, which charges more, the difference will have to be borne by the policyholder.

The TPA has asked corporates to ensure that their employees avail of cashless facility in these very hospitals. New India, which also has the largest health insurance portfolio, has set the ball rolling through its third-party administrator (TPA) Medi Assist. Medi Assist has spread to all group mediclaim policyholders a list of hospitals and the ‘reasonable charges’ levied by them for various procedures.

We shall restrict the settlement of the claim only to the limits indicated in the attachment and the employees shall be liable to meet the difference in the amount,” the TPA has said. “Should they avail the treatment for these procedures in any other hospital.

The rate card circulated provides a matrix of standard charges for secondary and tertiary providers in the premium and non-premium categories across various procedures. The tariff rates vary for metros where provision is made for higher costs.

Tax benefits and Mediclaim

Mediclaim insurance offers both tax savings and medical cover. Mediclaim cover provides security to meet unanticipated medical expenses. You can insure against medical expenses of yourself or dependents. These policies are offered by almost all insurance companies.

In some cases, preexisting also covered on payment of an additional premium. They provide insurance cover for the treatment of most ailments with hospitalisation. In addition to the basic cover, there are trappings available on payment of an extra premium. Some insurance companies provide cover for day-care and annual medical check-ups as well. You should go through the cover and keeping out clauses carefully. The cover may be enhanced to ailments not normally covered also.

The deduction is available only to individuals and Hindu Undivided Family members. The premium paid for mediclaim policies is tax deductible. Under the Income Tax Act, exemption is available for the amount contributed towards medical insurance premium. This is provided under Section 80D of the Income Tax Act. According to these provisions, premium paid towards a mediclaim insurance is deducted from the total income of an assessee.

The dependence of parents will have to be proved in order to claim the release. Dependence will be evident in case the own resources of the parents are not sufficient to support them. In case of an individual, the amount deductible includes any sum paid for insurance on his health, on the health of his spouse, dependent parents or dependent children.