MEDICLAIM RENEWAL BY INSURERS MUST BE AUTOMATIC, RULES SC

The Supreme Court has ruled that insurance companies are obliged to renew the mediclaim policy automatically unless otherwise mutually agreed between insurer and insured.

A bench comprising Justice SB Sinha and Justice VS Sirpurkar also asked the regulator (Irda) to lay down guidelines to check the imposition of arbitrary clauses of mediclaim policy and its renewal. The court said, “renewal of a mediclaim policy subject to just exceptions should ordinarily be made”.

But where a renewal is based on mutual consent, there may be no automatic renewal. A mediclaim policy in which a senior citizen is involved would stand on a different footing. It will depend upon the contract entered into between the parties and the statutes operating in the field as also the constitutional scheme, court said.

It rejected the plea of some public sector insurance companies, which had said that wherever renewal is subject to mutual consent of the parties, it might be at its whims and caprice to refuse the renewal of the policy.

“The insurance companies cannot, either in their prospectus or in the terms of policy, lay down any condition which would be derogatory to the terms and conditions approved by the regulatory authority. If the contract of insurance itself provides for renewal of an insurance policy the same may not mean that the assured has a legal right of automatic renewal, but the courts are required to strike a balance” said Justice Sinha writing the verdict. The court asked the authorities concerned to lay down guidelines in this regard.

“We would like to observe that keeping in view the role played by the insurance companies, it is essential that the regulatory authority must lay down clear guidelines by way of regulations or otherwise. No doubt, the regulations would be applicable to all the players in the field...” the court said. The duties and functions of the regulatory authority, however, are to see that the service provider must render their services keeping in view the nature thereof. It will be appropriate if the central government or the general insurance companies also issue requisite circulars,” the court said.

It further said, “ We would request the IRDA to consider the matter in depth and undertake a scrutiny of such claims so that in the event it is found that the insurance companies are taking recourse to arbitrary methodologies in the matter of entering into contracts of insurance or renewal thereof, appropriate steps on that behalf may be taken”.

Source:
Sanjay K Singh, New Delhi
The Economic Times