Delhi

North

CC/269/2024

SUSHMA GUPTA - Complainant(s)

Versus

STAR HEALTH AND ALLIED INSURANCE CO LTD - Opp.Party(s)

29 Apr 2024

ORDER

District Consumer Disputes Redressal Commission-I (North District)

[Govt. of NCT of Delhi]

Ground Floor, Court Annexe -2 Building, Tis Hazari Court Complex, Delhi- 110054

 

Consumer Complaint No.269/2024

In the matter of

Sushma Gupta

E-51, Ground Floor, Kamla Nagar

Delhi- 110007                                             …      Complainant

Vs.

Star Health and Allied Insurance Co. Ltd.

1, New Tank Street,

Valluvar Kottam High Road

Nungambakkam

Chennai- 600034                                        …     Opposite Party

 

ORDER

29.04.2024

(Divya Jyoti Jaipuriar)

1. We have heard the arguments on admissibility led by Shri Alok Gupta, Son of the Complainant herein on the last date of hearing and perused the records. The main grievance of the Complainant in this complaint is that M/s Star Health and Allied Insurance Company Limited (OP herein) has repudiated the health insurance claim of the insured patient on 09.06.2023, on the frivolous ground of alleged non-disclosure of the pre-existing disease at the time of purchase of the insurance policy. The said policy was subsequently cancelled by OP on the same ground of non-disclosure of pre-existing disease.
2. The Complainant purchased a health insurance policy on 23.12.2019 from M/s Oriental Insurance Co. Ltd (Not a party) which continued till 22.12.2021, when the said policy was ported to OP Insurance Company herein. The ported policy with OP herein commenced from 23.12.2021 and was in force until the OP herein cancelled the policy. The policy covered the Complainant herein and her husband namely Shri Pramod Gupta. Shri Pramoid Gupta was admitted in M/s Escort Heart Institute and Research Centre Ltd (Not a party) on 23.12.2022 for treatment of “unstable angina”. During scrutiny of documents for pre-authorisation of cashless treatment, OP insurance company found out that Shri Pramod Gupta has a pre-existing condition of CAD-PTCA (Coronary Artery Disease/ Percutaneous Transluminal Coronary Angioplasty) since 23.10.2016, which was not disclosed at the time of purchase of the policy. Accordingly, the pre-authorisation for cashless treatment was rejected by the OP vide its letter dated 24.12.2022. Thereafter, on filing subsequent claim of the reimbursement of hospital expenses was also rejected on 09.06.2023 on the same ground of non-disclosure of pre-existing health condition of CAD-PTCA at the time of purchase of the health insurance policy.
3. During the hearing, it was fairly admitted by the son of the Complainant that angioplasty was indeed conducted upon his father Shri Pramod Gupta and stent was implanted on 23.10.2016. He further states that the same was not disclosed to the OP insurance Company as well as the previous insurance company as the Complainant was not aware about the fact that the disclosure of pre-existing health condition is necessary at the time of purchase of policy.
4. The fact that the Complainant did not disclose the pre-existing health condition is also established by the policies annexed by the Complainant in this complaint. The policy issued by M/s Oriental Insurance on 23.12.2019 as well as the policy issued by OP herein on 23.12.2021, which are part of the annexures, clearly indicate that no pre-existing ailment or health condition was disclosed by the Complainant herein to respective insurance companies.
5. The non-disclosure of material information at the time of purchase of insurance policy is fatal. Pleading that the Complainant was not aware about the compulsory disclosure of pre-existing health condition is also not an acceptable excuse. While purchasing insurance policy, the purchase of the policy is supposed to give correct and complete information to the insurance company in the proposal form. The proposal form is the most important document for taking a decision for issuance of the insurance policy as well as on the amount of premium to cover the requirements of the policy holder. The issue of non-disclosure of relevant information in the proposal form was examined by Hon’ble Supreme Court in the matter of Reliance Life Insurance Company Limited vs Rekhaben Nareshbhai Rathod [(2019) 6 SCC 175]. In the Reliance life Insurance case (supra), Hon’ble Supreme Court, while examining non-disclosure of existing policies of the insured, has held that non-disclosure of existing individual life insurance policy by the insured is concealment of material fact and the Insurance Company is justified in repudiating the claim on such ground. In this context, Hon’ble Supreme Court has also referred to its earlier judgment in the matter of Satwant Kaur Sandhu vs New India Assurance [(2009) 8 SCC 316] in which it has been held that information sought in the proposal form is material for the purpose of entering into contract of insurance. In Reliance case (Supra), Hon’ble Supreme Court held as under:

“30. It is standard practice for the insurer to set out in the application a series of specific questions regarding the applicant's health history and other matters relevant to insurability. The object of the proposal form is to gather information about a potential client, allowing the insurer to get all information which is material to the insurer to know in order to assess the risk and fix the premium for each potential client. Proposal forms are a significant part of the disclosure procedure and warrant accuracy of statements. Utmost care must be exercised in filling the proposal form. In a proposal form the applicant declares that she/he warrants truth. The contractual duty so imposed is such that any suppression, untruth or inaccuracy in the statement in the proposal form will be considered as a breach of the duty of good faith and will render the policy voidable by the insurer. The system of adequate disclosure helps buyers and sellers of insurance policies to meet at a common point and narrow down the gap of information asymmetries. This allows the parties to serve their interests better and understand the true extent of the contractual agreement.

31. The finding of a material misrepresentation or concealment in insurance has a significant effect upon both the insured and the insurer in the event of a dispute. The fact it would influence the decision of a prudent insurer in deciding as to whether or not to accept a risk is a material fact. As this Court held in Satwant Kaur [Satwant Kaur Sandhu v. New India Assurance Co. Ltd., (2009) 8 SCC 316 : (2009) 3 SCC (Civ) 366] “there is a clear presumption that any information sought for in the proposal form is material for the purpose of entering into a contract of insurance”. Each representation or statement may be material to the risk. The insurance company may still offer insurance protection on altered terms.

32. In the present case, the insurer had sought information with respect to previous insurance policies obtained by the assured. The duty of full disclosure required that no information of substance or of interest to the insurer be omitted or concealed. Whether or not the insurer would have issued a life insurance cover despite the earlier cover of insurance is a decision which was required to be taken by the insurer after duly considering all relevant facts and circumstances. The disclosure of the earlier cover was material to an assessment of the risk which was being undertaken by the insurer. Prior to undertaking the risk, this information could potentially allow the insurer to question as to why the insured had in such a short span of time obtained two different life insurance policies. Such a fact is sufficient to put the insurer to enquiry.”                                                                        (underlining by us)

6. Hon’ble Supreme Court in another case titled Oriental Insurance Company v. Mahendra Construction [2019 INSC 444: (2019) 18 SCC 209] has reiterated that the insured is under obligation to disclose all relevant information including previous insurance and claims, if any while applying for a new insurance policy. Such non- disclosure is concealment of material fact and is a valid ground for repudiation of the claim. In Mahendra Construction (supra), Hon’ble Supreme Court held as under:

“11 … Insurance is governed by the principle of utmost good faith, which imposes a duty of disclosure on the insured with regard to material facts.

…

12 The burden cannot be cast upon the insurer to follow up on an inadequate disclosure by conducting a line of enquiry with the previous insurer in regard to the nature of the claims, if any, that were made under the earlier insurance policy. On the contrary, it was the plain duty of the respondent [insured] while making the proposal to make a clear and specific disclosure.

15. … This suppression goes to the very root of the contract of insurance which would validate the grounds on which the claim was repudiated by the insurer.”

7. On the issue of non-disclosure of material fact including the pre-existing disease by the policy holder, Hon’ble Supreme Court in the matter of Bajaj Allianz Life Insurance Co. Ltd. v. Dalbir Kaur [(2021) 13 SCC 553] held as under:

“7. A contract of insurance is one of utmost good faith. A proposer who seeks to obtain a policy of life insurance is duty-bound to disclose all material facts bearing upon the issue as to whether the insurer would consider it appropriate to assume the risk which is proposed. It is with this principle in view that the proposal form requires a specific disclosure of pre-existing ailments, so as to enable the insurer to arrive at a considered decision based on the actuarial risk.”

8. The law laid down by Hon’ble Supreme Court is very clear that the insured and the policy holder is duty bound to disclose all material information including pre-existing health condition to the insurance company in the proposal form at the time of purchase of insurance policy. Failure to do so can attract repudiation of insurance claim and cancelation of the policy in question by the insurance company. In the case in hand, there is clearly concealment of the major health condition of insures Shri Pramod Gupta when the insurance policy was purchased. This concealment cannot be said to be immaterial when it comes to deciding on the repudiation of the insurance claim and subsequent cancellation of the insurance policy by the OP insurance company.
9. At this stage, we would like to refer to another judgment of Hon’ble Supreme Court in the matter of  LIC v. Asha Goel [(2001) 2 SCC 160]. While examining the issue of sanctity of insurance contract, Hon’ble Supreme Court in LIC case (Supra) has laid down a test to determine the suppression of material fact as under:

“12. … The contracts of insurance including the contract of life assurance are contracts uberrima fides and every fact of material (sic material fact) must be disclosed, otherwise, there is good ground for rescission of the contract. The duty to disclose material facts continues right up to the conclusion of the contract and also implies any material alteration in the character of risk which may take place between the proposal and its acceptance. If there is any misstatements or suppression of material facts, the policy can be called into question. For determination of the question whether there has been suppression of any material facts it may be necessary to also examine whether the suppression relates to a fact which is in the exclusive knowledge of the person intending to take the policy and it could not be ascertained by reasonable enquiry by a prudent person.”

10. While applying the test as laid down by Hon’ble Supreme Court in LIC case (Supra), the fact that the insured/ patient Shri Pramod Gupta underwent CAD-PTCA in the year 2016, was in exclusive knowledge of the policy holder at the time of purchase of the policy in the year 2019, but the same was not disclosed to the insurance company. Such non-disclosure is a classic example of suppression of material fact in the proposal form. Further, the law laid down by Hon’ble Supreme Court in the judgments referred above, repudiation of claim as well as cancellation of the policy by OP insurance company on the ground of non-disclosure of the pre-existing health condition cannot be faulted at.
11. In conclusion, while we are of the opinion that non-disclosure of the of any information sought in the proposal form including existence of any pre-existing health conditions of any of the insured, is clearly a case of suppression, untruth or inaccuracy in the statement of the insured and the same is a valid ground for repudiating the claim filed by the Complainant herein and subsequent cancelation of the policy by the OP insurance company. Therefore, we do not find any infirmity in the repudiation letters dated 24.12.2022 and 09.06.2023and subsequent cancellation of the policy.
12. As a result, we do not find any merit in this complaint. Accordingly, this complaint is dismissed at admission stage itself being devoid of merit. No costs. Office is directed to supply the copy of this order to the parties as per rules. Office is also directed to return all original documents filed by the Complainant, if any, after keeping copies of the same in the record. Thereafter, file be consigned to the record room. Order pronounced in open court.

 

 

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___________________________

Divya Jyoti Jaipuriar, President

 

 

 

___________________________

Harpreet Kaur Charya, Member