After rejection of the insurance claim, Mrs Aruna Vaish filed a complaint with the Insurance Ombudsman. The Insurance Ombudsman via a letter dated October 12, 2011 said that her claim fell outside their jurisdiction. Subsequently, she went to fight her case in the State Consumer Forum and then in NCDRC. In the time between fighting her (Aruna Vaish) case, she had died so her husband Deepak Chandra Vaish fought the long battle against the insurance company on her behalf.
Why did Bajaj Allianz General Insurance not pay the insurance money?
Mrs Aruna Viash took an overseas travel insurance policy from Bajaj Allianz General Insurance which was valid from June 19, 2009 to October 16, 2009. For purchasing this policy, Mrs Aruna Vaish paid Rs 16,001 as premium.
On June 29, 2009, Mrs Aruna Viash was admitted to a hospital in the US for weakness and low blood pressure diagnosis. Subsequently, the doctors found out that she had Urinary Tract Infection (UTI) and Sepsis. After being treated and getting discharged from hospital, she filed an insurance claim and was asked for supporting documents. After she submitted the documents, the claim was rejected on July 28, 2009. The reason for rejection as given by Bajaj Allianz General Insurance to the complainant was that the complainant allegedly did not disclose her pre-existing diseases which violated the insurance policy’s terms and conditions.
In response to this rejection, the complainant said that she was not prompted to fill out any forms to disclose any medical condition during the purchase of the overseas travel insurance policy.
She approached the State Consumer Commission to escalate this issue. During the trial, lawyers representing Bajaj Allianz General Insurance objected to her claim. They said, “The Complainant (Mrs Aruna Vaish) was cognizant of the policy exclusion clause 2.4 and 2.4.12, which clearly delineated that medical expenses linked to pre-existing conditions were not covered.” The insurance company argued before the State Commission that the complainant’s medical history shows she had Type II Diabetes thus, required regular insulin treatment, hypertension, medication for hypothyroidism, rheumatoid arthritis, and occasional palpitations. Hence non-disclosure of all this medical history information in the policy proposal form during policy acquisition time prevented them from accurately assessing the risk involved and deciding upon coverage terms including relevant exclusions.”The Complainant’s omission in declaring her pre-existing ailments and medication constituted a significant non-disclosure of crucial information, thus disqualifying her from claiming any relief,” said Bajaj Allianz General Insurance before State Consumer Commission.
The complainant asserted before the State Consumer Commission by saying that she was not prompted for detailed information and the insurance policy was issued solely on the basis of passport and travel details.
Lawyers representing Bajaj Allianz General Insurance contended before the State Commission that the Complainant was indeed requested to complete the proposal form.
After hearing arguments made by the complainant and Bajaj Allianz General Insurance’s lawyers, the State Consumer Commission said, “As a result of the above discussion I find that repudiation of the claim by the insurer is not justified. However, the complainant must get only reimbursement of her expenses of treatment. Since the insurer was defending its case on a plea which cannot be termed as malafide, the complainant is not entitled to compensation for loss of mental peace, agony, harassment and insult. For the same reasons she is not entitled to the cost of litigation.”
After the order was passed by the State Commission on February 1, 2017 both the complainant and Bajaj Allianz General Insurance filed an appeal in NCDRC.
The complainant said to NCDRC, “The State Commission failed to acknowledge that the Respondent (Bajaj Allianz General Insurance) was found engaged in unfair practices. This finding led to the direction for the Respondent to cover the treatment expenses. The State Commission overlooked the fact that the appellant had to settle payments with the concerned Hospital at the prevailing exchange rate of USD on the date of actual payment realization. This crucial factor needs consideration in determining the compensation owed.”
Lawyers representing Bajaj Allianz General Insurance said, “The State Commission erroneously considered only one issue ‘whether the respondent was asked to complete the proposal form and whether it was filled out’. Regardless of its completion or non-disclosure of pre-existing conditions, such diseases were explicitly excluded under Condition No. 2.4.12 of the policy. The State Commission failed to appreciate direct nexus with her pre-existing condition and the treatment received at Sequoia Hospital. Diabetes was cited as a predisposing factor for UTI. Diabetes would increase susceptibility to infections and sepsis. The policy in question had an illness limit of 15,000 USD. Thus, the Appellant’s liability should be capped at this amount.”
The appeal in NCDRC was filed by both Bajaj Allianz and the complainant in 2017 and NCDRC passed its order on December 27, 2023. NCDRC said, “Upon a careful examination of the contentions of both parties and the material on record, it is evident that the Complainant was entitled to medical treatment abroad during her hospital admission from 29.06.09 to 03.07.09, and the repudiation of her claim based on the grounds stated in the letter dated 28.07.2009 is, therefore, untenable. However, in terms of the policy in question dated 11.06.2009 obtained by her by paying an appropriate premium, the limit of her claim towards the scope of medical expenses was USD 20,000. Therefore, she is entitled only to claim up to USD 20,000, as on the date of discharge from the hospital on 03.07.2009. As the insurance company repudiated the entire claim on untenable grounds, she will also be entitled for compensation for the delay.”
The order passed by NCDRC had the following award:
- $ 20,000 in equivalent Indian Rupees as on July 3, 2009.
- Simple interest of 9% p.a. on $20,000 from July 28, 2009 till date of final payment.
According to the NCDRC order document, the total expenses for Mrs Aruna Vaish’s treatment and hospitalization amounted to $83,801.48 which amounts to more than Rs 40 lakh in Indian Rupees.
As it has been 14 and half years since July 3, 2009, so the final payment comes out to be approximately $20,000*9%*14.5+$20,000= $46,100 which needs to be paid in Indian Rupees with the exchange rate dated July 3, 2009. As per RBI data the 1 USD was valued at Rs 47.99 on this date. So, the compensation amount comes out to be around Rs 12.52 lakh.
It must be noted that the fight can still very well go on, because an appeal against an order passed by NCDRC can be filed in the Supreme Court. The time limit to do so is within 30 days from the date of passing of the order by NCDRC.