
The State Consumer Disputes Redressal Commission in Punjab has recently expressed concern over insurance companies rejecting claims of customers on baseless grounds. The Commission’s President, Justice Daya Chaudhary, and Member Simarjot Kaur have emphasized the need for the Insurance Regulatory and Development Authority (IRDA) to intervene and prevent insurance companies from using unfair means to process claims and harass customers.
The Commission has called on the IRDA to issue strict directions to insurance companies to safeguard the rights of the insured and ensure transparent scrutiny of claims made by the insured or their nominees.
The State Consumer Commission made these observations while dealing with two appeals filed by HDFC ERGO General Insurance Company Limited and HDFC Bank Limited against an order passed on a consumer’s complaint by a district consumer commission.
Case Background
The consumer complaint was filed by Shubh Lata, whose husband had taken a housing loan from HDFC Bank in 2019. He had also insured the loan by purchasing the Loan Credit Assure Policy of HDFC ERGO General Insurance, based on the advice of bank officials. Unfortunately, Lata’s husband passed away in 2021 due to renal failure and acute kidney injury. Lata requested HDFC ERGO to repay the housing loan since it was secured under its credit assure policy. However, the claim was rejected on the grounds that her husband’s medical condition was not covered under the “Major Medical Illnesses” mentioned in the policy.
A district consumer commission held in 2022 that HDFC ERGO had arbitrarily rejected the claim in connivance with the bank. The district commission restrained the bank from demanding the unpaid amount from Lata and instead ordered the insurer to pay the balance amount of the loan. This decision was challenged before the State commission.
State Commission’s Findings
After hearing the arguments, the State commission considered whether the cause of death of Lata’s husband fell under the category of “Major Medical Illness” as mentioned in the policy. To answer this question, the commission looked at the definitions of acute renal failure and chronic kidney disease. It noted that acute diseases are sudden and unexpected, while chronic diseases persist over a long period of time.
In this case, the State Commission found that Lata’s husband suffered from Chronic Liver Disease and Hepatorenal Syndrome (Liver and Kidney disease), which was of a complicated nature. Therefore, it should have been covered under the category of “Major Medical Illness” as per the policy. The commission concluded that the insurance company had failed to provide any cogent reason or evidence justifying the rejection of the genuine claim.
State Commission’s Decision
The State Commission partially allowed HDFC Bank’s appeal, stating that the bank has the right to claim the outstanding loan amount. However, it clarified that Lata is entitled to the claim lodged with the insurance company, which is bound to settle the loan amount. The commission modified the district commission’s order to allow the bank to claim the outstanding loan amount from either HDFC ERGO General Insurance Co. Ltd. or from Lata, while setting aside the liability of compensation and litigation expenses imposed on HDFC Bank.
Conclusion
The State Consumer Disputes Redressal Commission in Punjab has raised concerns about insurance companies rejecting claims on baseless grounds. In the case of Shubh Lata, the commission found that the insurance claim for her husband’s housing loan should have been covered under the policy’s “Major Medical Illness” category. The commission ordered the insurer to pay the balance amount of the loan and allowed the bank to claim the outstanding loan amount. The commission emphasized the need for insurance companies to justify claim rejections and ensure transparency in the processing of claims.
Before purchasing insurance policy,Insurance companies are very polite and humble and once the claim accrue Insurance Companies hidden face come out and finding the way to reject the claim anyhow. IRDA itself is the master keep silent knowing the harassment of claimants. L