Policy terms can’t change to exclude genetic disorders

Background: Niranjan Dalal and his wife Jyotsna were insured under a mediclaim policy issued by

New India Assurance

. The policy was initially taken in 2001 and then renewed without any break. In July 2009 Jyotsna fell ill and was diagnosed to be suffering from a kidney problem. She was required to undergo dialysis periodically.

The initial claim was paid by the insurer. Later, the claims for dialysis were rejected on grounds that she was suffering from polycystic kidney disease (PKD) which is a congenital genetic disorder and is excluded from the purview of the policy. Niranjan’s representation to the grievance cell of the insurer did not help. He then approached the insurance ombudsman who upheld the rejection. Finally, with the help of

Consumers Welfare Association

, he filed a complaint before the South Mumbai District Forum. It was pointed out that PKD is generally a genetic disorder, but it can even occur due to repeated dialysis. Even the treating doctor had certified that Jyotsna did not have any congenital disease. The ailment had occurred when Jyotsna was about 65 years old. So it would be incorrect to repudiate the claims on the presumption that the ailment was genetic. Besides,

genetic disorders

were not excluded from coverage when the policy was initially taken, but this exclusion was subsequently inserted at the time of renewal without the knowledge or consent of the insured. The insurance company contested the complaint. It argued that the terms of the renewed policy were binding and that the ailment was genetic, so that claims had been rightly repudiated. Overruling these objections, the South Mumbai Consumer Forum allowed the complaint. It directed the insurance company to pay all the previous claims for dialysis, totalling Rs 68,575, along with interest at 9% per annum from June 30, 2011 till settlement. In addition, Rs 5,000 was awarded as compensation and Rs 3,000 towards costs. The forum also directed that subsequent claim for dialysis should not be rejected on the same grounds, as it would constitute an unfair trade practice.

The insurer appealed against the decision. Justice Bhangale observed that the terms of the policy cannot be unilaterally changed. This view was taken by the Maharashtra State Commission in Syndicate Overseas Pvt. Ltd. v/s

United India Insurance

, and also by the National Commission in Mahesh Chand Ghiya v/s New India Assurance. The commission also noted that the Delhi high court, in

United India

Insurancev/s Jai Parkash Tayal, had held that it was wrong to exclude genetic disorders at the time of renewal of policy. Accordingly, by its order of March 7, 2018 delivered by Justice A P Bhangale for the bench along with D R Shirasao, concluded that any subsequent change unilaterally imposed in the policy would not be binding. It dismissed the insurance company’s appeal with further costs of Rs 20,000 payable to the insured. Impact:

Policy terms

cannot be changed to the detriment of the insured at the time of renewal.

(The author is a consumer activist and has won the Government of India’s National Youth Award for Consumer Protection. His email is jehangir.gai.columnist@outlook. in)

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