Health policy claim can't be rejected for delay in lodging

Insurance companies take their own time to process claims, ignoring the time frame stipulated under the Protection of Policyholders Interest Regulations. But when there is a delay on the part of the insured in making the claim, the insurance company promptly rejects the claim for not having been lodged in time. This is unfair and detrimental to consumer interest.

Rita was insured with New India Assurance under its Mediclaim policy. The policy commenced on January 16, 1999, and was renewed without break. In the ninth year of the policy, Rita was hospitalised for vaginal hysterectomy from September 29, 2010, to October 2, 2010. The intimation about the hospitalisation was given to the insurance company on September 30, 2010. After discharge, Rita felt weak for some time. Later, on November 17, 2010 she lodged a claim for Rs 1.27 lakh incurred towards the surgery, hospitalisation and treatment. The claim was rejected on the sole ground that it had not been lodged within one month of discharge from the hospital but after a delay of 17 days.

Alleging the rejection of the claim was not justified and constituted a deficiency in service, Rita filed a complaint before the Additional Consumer Forum for Mumbai Suburban District against Health India TPA Services as well as New India Assurance.

The TPA did not care to appear, but the insurance company contested the complaint. It argued the terms of the insurance contract provided that a claim must be lodged within 30 days, and since Rita had not done so, she had forfeited her right to make a claim.

The Forum observed the delay of 17 days caused due to weakness and Rita's health condition could be condoned. The stipulation to lodge a claim within 30 days of discharge is not mandatory but to facilitate expeditious settlement. So this clause cannot be used against the insured to repudiate the claim. The Forum relied on the decisions of the Maharashtra State Commission in the case of New India Assurance versus Nanasaheb Jadhav, and also of the National Commission in the case of State of Maharashtra versus ICICI Lombard, where it was observed that the claim should not be rejected on the basis of such technicalities.

The Forum concluded the claim was payable. The TPA and the insurance company were jointly and severally directed to pay Rita Rs 1.27 lakh along with 10 per cent interest from the date of filing the complaint. Additionally Rs 10,000 was awarded towards compensation for mental harassment and Rs 5,000 as costs.

Rita had also sought restoration of the no-claim bonus. The Forum refused to grant this relief, as it had become time-barred since the bonus had been withdrawn in 2007 while the complaint was filed in 2011.

It is to be noted that a Mediclaim policy provides for reimbursement of pre-hospitalisation, hospitalisation and post-hospitalisation expenses upto 60 days. So, if a claim is to be lodged within 30 days of discharge, the entire claim cannot be lodged at one ago, and the insured would have to lodge a second claim for the remaining 30 days post-hospitalisation treatment. This amount is comparatively less and there are several instances where this amount is not paid, yet the insured does not consider it worth fighting for, as the amount is comparatively negligible. To simplify matters, the insurance company must encourage the lodging of only one claim for the entire treatment.

The writer is a consumer activist