The National Consumer Disputes Redressal Commission (NCDRC) on Wednesday has asked the Insurance Regulatory and Development Authority of India (IRDA) to issue new and fresh guidelines on the functioning of Insurance Agents regarding complete disclosures of medical conditions of customers and the consequences arising out of the non-disclosures thereof.
“A fresh guideline needs to be issued, if need, by modifying the proposal form wherein it is clearly brought to the notice of the customer that non-disclosure of medical conditions will lead to repudiation.”
The Commission presiding Dr SM Kantikar and Binoy Kumar restated that suppression of facts in the proposal would make the insurance policy voidable by the insurer, reasoning that a proper clarity on part of the insurance agent can help avoid mental stress and unnecessary expenses by the insured.
An insured person had filed a complaint against an insurance company as the company rejected his claim on grounds of concealing his medical records. The State Commission had given an order in favour of the complainant and held that “Hypertension and diabetes are not a life-threatening diseases. In present they are lifestyle diseases”, thus an appeal was made by the insurance company against that order.
The counsel Adv. Joydeep Bhattacharya on behalf of the insurance company argued that it was right in rejecting the insurance as the insured (respondent in this appeal) had died of a heart attack and a respiratory disorder, which were directly linked to pancreatic and diabetic diseases which were not disclosed by the insured beforehand.
While Adv. Hitesh Kumar on behalf of the respondent claimed that there was no reason to reject the claim as the appellants had failed to prove that the pancreatic and diabetic problems were the actual cause of the insured’s death.
While setting aside the order of the State Commission, the NCDRC relied on the judgement given in Manmohan Nanda v. United India Assurance Co. Ltd., where the insured was awarded compensation by the insurance company only when the insured had fully and completely disclosed all of his pre-existing medical histories.
The respondents informed the Commission that the insurance agent had misled the insured and the insurance policy was signed in good faith. The Commission emphasised reevaluating the role and duties of insurance agents, thus stating that “In order to dispel all doubts, we are of the opinion that Insurance Regulatory and Development Authority of India (IRDA) should take up the matter in the interest of consumers”
Case: HDFC Standard Life Insurance Co. Ltd. v Vishan Rathore