Chandigarh

StateCommission

A/82/2023

United India Insurance Co. Ltd. - Complainant(s)

Versus

Prof. Kulwant Singh - Opp.Party(s)

Gurpreet Singh Ahuluwalia Adv.

11 May 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION,

U.T., CHANDIGARH

 

 

Appeal No.	:	82 of 2023
Date of Institution	:	28.04.2023
Date of Decision	:	11.05.2023

 

 

 

 

 

 

United India Insurance Company Ltd., SCO 177-178, Sector 8-C, Chandigarh through its Regional Manager.

….Appellant/Opposite Party.

Versus

1]       Prof. Kulwant Singh (Retd.), son of S. Dalip Singh resident of House No.732, Phase III-B-I, Mohali (Punjab) 160059.

2]       Smt. Baljit Kaur wife of Prof. Kulwant Singh (Retd.), resident of House No.732, Phase III-B-I, Mohali (Punjab) 160059.

...Respondents/Complainants.

 

BEFORE:    JUSTICE RAJ SHEKHAR ATTRI, PRESIDENT

               MR. RAJESH K. ARYA, MEMBER

ARGUED BY :-    

 

Sh. Gurpreet Singh Ahluwalia, Advocate for the appellant alongwith

Sh. Mohinder Dawer, Deputy Manager, United India Insurance Co. Ltd., Regional Office, Sector 17B, Chandigarh.

 

PER  RAJESH  K. ARYA, MEMBER

                This appeal has been filed by the opposite party – United India Insurance Company Ltd. (appellant herein), against order dated 20.03.2023 passed by the District Consumer Disputes Redressal Commission-I, U.T., Chandigarh (in short ‘District Commission’), vide which consumer complaint No.254 of 2020 filed by the complainants (respondents herein) has been partly allowed in the following manner:-

“11.   In view of the above discussion, the present consumer complaint succeeds and the same is accordingly partly allowed. OP is directed as under :-

1. to renew original policy on the existing terms and conditions by increasing of annual premium by not more than 5%.
2. to pay an amount of ₹25,000/- to the complainants as compensation for causing mental agony and harassment to them;
3. to pay ₹10,000/- to the complainants as costs of litigation.

12.    This order be complied with by the OP within thirty days from the date of receipt of its certified copy, failing which, it shall make the payment of the amounts mentioned at Sr.No.(ii) above, with interest @ 12% per annum from the date of this order, till realization, apart from compliance of direction at Sr.No.(iii) above.”

2]       The brief facts, as culled from the impugned order passed by the District Commission are that the respondents purchased the individual medi claim policy issued by the appellant for the first time on June 30, 2002 and continued paying premium for the same up-to June 29, 2020. The complainants paid the premium every year regularly for the sums insured as per the changing age slabs determined by the appellant which stood at Rs.27,913/- per annum for the sum insured of Rs.5,00,000/- for both the respondents. The respondents availed an amount of Rs.80,000/- as insurance cover for undergoing cataract surgery for their both eyes as authorized by the TPA Medisave Health Insurance TPA Ltd. under the cashless card facility provided by the said company. The appellant arbitrarily and unilaterally discontinued the above said policy with effect from 01.03.2020 through a three month notice by a registered letter dated 29.11.2019 and informed the respondents that the said product had become unsustainable and unviable and as such, could not be continued and the customer could migrate to either of their two products namely individual health insurance policy or family medicare policy without mentioning any terms and conditions of these new products. Respondent No.1 enquired about the letter from the company’s agent who informed that the policy issued to them shall not be renewed and that there was no point in agitating the matter and instead tried to convince them that as its old customers, he could request the company to oblige the respondents to issue them their new product family medicare policy for a sum of Rs.2,50,000/- on the existing premium amount of Rs.27,913/- per annum in lieu of the existing policy with an assured sum of Rs.5,00,000/- on an annual premium of Rs.27,913/-, which offer, the respondents refused to accept as it grossly reduced their assured sum of Rs.5,00,000/- by half to Rs.2,50,000/-. Being aggrieved, the respondents served legal notice upon the appellant and thereafter filed complaint before the District Commission.

3]                On the other hand, it was the case of the appellant that it was the prerogative of the respondents to accept or reject the offer. It was further pleaded that the withdrawal of the policy namely individual mediclaim and introduction of new two polices namely individual health insurance policy and family medicare policy was in accordance with the guidelines and rules of the IRDA. It was further pleaded that in the policy under the head “important notice” it was clearly mentioned that the policy might also be withdrawn after following the due process as laid down by the IRDA by giving three months prior notice for the same. Rest of the allegations were denied pleading no deficiency in service on its part.

4]                After hearing the Counsel for the parties and going through the material available on record, the District Commission partly allowed the complaint as stated above.

5]                The order of District Commission has been assailed by the appellant on the ground that the District Commission allowed the complaint holding that the appellant has failed to adduce any documentary evidence that once the termination notice of existing policy was issued to the respondents, they had offered to them similar health insurance product more or less nearing the same premium as being charged earlier whereas the three month notice itself carries the offer of migration in the two available policies, which the respondents did not avail. It has further been stated that as per Rules and Regulations devised by IRDA, the Insurance Company can discontinue with any policy giving three months notice to the Insured alongwith offer to migrate into the available operational policies, which was duly given vide letter dated 29.11.2019, which offer, as stated above, was not availed by the respondents . It has further been stated that the District Commission exceeded its jurisdiction in directing the appellant to renew the policy on existing terms and conditions by increasing premium by not more than 5%.

6]                It may be stated here that on 04.05.2023, Sh. Mohinder Dawer, Deputy Manager, United India Insurance Co. Ltd., Regional Office, Sector 17B, Chandigarh submitted before this Commission that no prior approval is required and obtained for withdrawal of Insurance Scheme/Policy, as per Clause 1 of the Individual Mediclaim Policy, Annexure OP-1 [which is reproduced in Para 8 of the impugned order] and rather, they have to send intimation regarding withdrawal of the policy. Accordingly, he was directed to file his affidavit to that effect. In his affidavit dated 08.05.2023, which is filed in pursuance to directions issued by this Commission, Sh. Mohinder Dawer has testified that the appellant followed the Rules and Regulations, framed by IRDA for withdrawal of policy, whereby a 90 days’ notice was served upon all insured, including the complainants, giving them offer to migrate in the other available/operational policies, to be availed by the insured, within the 90 days notice period. He has further testified that the respondents failed to accept the offer for migration into alternate Policies. He has further testified that the validity period of Insurance policy was 30.06.2019 to 29.06.2020. Further deposed that as per IRDA (Health Insurance) Regulations 2012, to withdraw a health insurance product, prior approval of IRDA was required but later, the IRDA issued (Health Insurance) Regulations 2016 amended up-to 19.11.2019 and further on 11.06.2020. Further deposed that the appellant had issued 90 days notice for withdrawal of policy dated 29.11.2019, as per amended IRDA Regulations and the appellant company had followed the laid procedure and intimated to the IRDA regarding withdrawal of policy. He has further deposed that as per the amended IRDA Regulations, no approval is required from the IRDA, for withdrawal of policy.

7]                After hearing the Counsel for the appellant and Sh. Mohinder Dawer, Deputy Manager, United India Insurance Co. Ltd., Regional Office, Sector 17B, Chandigarh and going through the material available on record, we are of the considered view that the appeal is liable to be dismissed at the preliminary stage for the reasons to be recorded hereinafter.

8]                We are not convinced with the arguments raised on behalf of the appellant as well as the deposition made by Sh. Mohinder Dawer in his affidavit. To our specific query, Sh. Mohinder Dawer submitted that as per the amended IRDA Regulations, no approval is required from the IRDA, for withdrawal of policy but he failed to satisfy us with regard to the taking of prior permission of the competent authority i.e. Insurance Regulatory and Development Authority of India for discontinuing its existing old policy. The respondents, who have had continuous coverage under a mediclaim policy are suddenly given a rude shock by the appellant that their old policy is being discontinued and they could opt for the new one that is being introduced. The insurance regulator, (Insurance Regulatory and Development Authority of India), had issued guidelines on Standardization of General Terms and Clauses in Health Insurance Policy Contracts on 11.06.2020. These guidelines have been issued under the provisions of Section 34(1) of Insurance Act, 1938 read with Regulation 20 and Schedule III of IRDAI (Health Insurance) Regulations, 2016. As per Para 11 of the said guidelines, it was for the Insurer i.e. the appellant, in the likelihood of the product being withdrawn in future, to intimate the insured persons i.e. the respondents about the same 90 days prior to expiry of the policy and further the insured person has the option to migrate to similar health insurance product available with the company at the time of renewal with all the accrued continuity benefits such as cumulative bonus, waiver of waiting period and further as per IRDAI guidelines, provided the policy has been maintained without a break. The appellant, as rightly observed by the District Commission, failed to adduce any documentary evidence that once the termination notice of the existing policy was issued to the respondents, they had offered to them similar health insurance product more or less nearing the same premium as being charged earlier. The District Commission further righty observed that the appellant failed to place on record any such documents that it had taken prior permission of the competent authority for discontinuing its existing old policy.

9]                Further, Guideline 8 thereof under the heading ‘Migration’, permits migration to a different company or to a different product but the decision to do so vests with the consumer and not with the insurer. So, the appellant could not compel the respondents - insured to migrate and opt for a different policy. The law on the subject is clear and well-settled by the Hon’ble Apex Court. A mediclaim policy is renewable, so long as the insured pays the premium, and the insurer has no right to arbitrarily refuse renewal. In Biman Krishna Bose v/s United India Insurance Co. Ltd. [III (2001) CPJ 10 (SC)], the Hon’ble Apex Court has held that the renewal of an insurance policy means repetition of the original policy. So, it would be extended for a further period on identical terms as the previous policy. In United India Insurance Co. Ltd. v/s Manubhai Dharmasinhbhai Gajera & Ors. [II (2008) CPJ 43 (SC)], the Hon’ble Apex Court has held that unless there is misrepresentation, fraud or non‑disclosure of material facts by the insured, the insurer is bound to renew the policy with continuation of the existing benefits. Even if IRDA grants permission for the withdrawal of a product, with or without giving notice to the insured, what would be its implications? Since the terms of the policy provide for renewal of the coverage till such time as the insured pays the premium, withdrawal of the policy constitutes a breach of contract, resulting in deficiency in service. It also constitutes an unfair trade practice since it would be opposed to consumer interest. Thus, the discontinuation of a mediclaim policy, which is a regular product, is neither fair nor legal. Reliance by the appellant on Regulation 3.22 relating to ‘Withdrawal of Health Insurance Product’ in IRDA (Health Insurance) Regulations, 2012, is of no significance as the appellant itself failed to take prior approval of the authority by giving reasons for withdrawal and complete details of the treatment to the existing policyholders i.e. the respondents.

10]              The District Commission, in our considered view, rightly held that by not offering similar health insurance product nearing the same premiums being charged earlier to its old regular super senior customers at their old age of 76 & 74 years respectively, when they needed this health insurance the most, the appellant has indulged into unfair trade practice and have been found to be deficient in providing service to the respondents. Thus, non-renewal has caused extreme hardship and mental agony to the insured/policy holders. Therefore, in our considered view, the District Commission rightly partly allowed the complaint by directing the appellant to renew original policy on the existing terms and conditions by increasing of annual premium by not more than 5% besides awarding compensation for causing mental agony and harassment and costs of litigation.

11]               For the reasons recorded above, the appeal is dismissed at the preliminary stage with no orders as to costs. Miscellaneous Application, if any, stand disposed of having rendered infructuous.

12]               Certified copies of this order be sent to the parties free of charge.

13]               File be consigned to Record Room after completion.

Pronounced.

11.05.2023.

(RAJ SHEKHAR ATTRI)

PRESIDENT

 

 

 

(RAJESH K. ARYA)

MEMBER

 

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