Health insurance is a contract wherein the insurance company commits to ensuring payment for medical costs if the insured becomes ill or has an accident that necessitates hospitalisation. Typically, insurance companies partner with top hospitals to offer cashless care to their insured customers. If the insurance provider does not have a relationship with the hospital, they compensate the insured for their out-of-pocket costs. The government also encourages the purchase of health insurance by offering an income tax deduction. The health insurance business in India has, traditionally, been regulated by the framework governing general insurance business as issued by the Insurance Regulatory and Development Authority of India (“IRDAI”) from time to time.
Section 2 (6C) of the Insurance Act, 1938 defines Health Insurance Business as under: "health insurance business" means the effecting of contracts which provide for sickness benefits or medical, surgical or hospital expense benefits, whether in-patient or out-patient travel cover and personal accident cover.
This article aims to explore how a health insurance policy works, what legal resources to take in case of insurance fraud and how you can avoid such a situation being a consumer. Read on!
How Does A Health Insurance Policy Work?
Health insurance, at its most basic level, works as a policy between an insurer and a policyholder, also referred to as a participant or beneficiary. In exchange for a recurring monthly payment, the insurer under this plan must pay all or a portion of the policyholder's medical expenses. Doctor visits, prescription medications, medical equipment, and procedures can all be included in medical costs.
Insurance companies also bargain with medical care providers to reduce the cost of their services to policyholders. Participants in a plan may pay much more for services from providers outside of their insurance network under a network arrangement. Some in-network services may not be covered by insurers under certain circumstances, for example, if they are received without prior authorization.
Individuals (“policyholders”) can leverage the benefits of health insurance by paying a premium amount at regular intervals over a tenure. To be protected under the same insurance plan for the rest of their lives, they can even select a health insurance plan with lifetime renewability.
Examining the healthcare requirements of the individual and the family is the first step in obtaining health insurance. The cost of the health insurance premium and the sum assured can be estimated using this approach and the person's financial capacity. However, it is important to strike a balance between the health insurance policy's premium and coverage, as it is not wise to compromise on the coverage for a lower premium.
However, due to certain issues, a policyholder may want to file a complaint against their respective health insurance company, and the issues may include:
Rejection of Settling of Claims
Negligence on the insurer’s part
Denial of Policy Renewal Request
Additional Policy Features costing more
Mis-selling of Insurance Plans
Starting with a complaint to the insurer directly, there are many avenues to address any dispute with a health insurance provider. It is possible to escalate the issue to the IRDAI if the resolution is unsatisfactory. A Civil Court or the Ombudsman can be contacted for further escalation of an unresolved dispute.
Following are the ways through which you can register a complaint against your health insurance provider:
- Register a Complaint with the respective Health Insurance Company
The policyholder should file their written complaint and any required supporting documentation to the appropriate insurance provider's grievance redressal officer, and they should then receive a written acknowledgement. The policy document and the official website of the insurance provider or IRDAI both must include the contact information.
The insurance company must respond to the complaint within 15 days of receiving the receipt. You can then go on to submit a complaint with the IRDAI if they fail to do so or if you are not pleased with the response you received.
- Integrated Grievance Management System
IRDAI has an integrated grievance management system (“IGMS”) for storing and tracking complaints or grievances relating to insurance (IGMS). All policyholders have centralised access to this system, which allows them to register and track complaints at any time. If policyholders are unable to contact the insurance provider directly, this mechanism is crucial in assisting them in filing grievances.
Points to bear in mind while submitting a complaint to the IGMS:
A complaint must be filed with the insurer first, and only if no action has been taken by the insurer may it be escalated to the IRDAI.
A complaint filed in the IGMS will transit through the IRDAI repository and the insurer's system.
The IRDAI has full access to and control over the IGMS.
The system has precise Turnaround Time (TAT) targets for tracking complaint-related activity.
- Insurance Ombudsman
The policyholder can seek help from the Insurance Ombudsman to raise an issue which is yet not been resolved by the respective insurance company.
A policyholder may approach the Ombudsman with a complaint if:
- The policyholder first approached the respective insurance company with the complaint and
(a) They have rejected it;
(b) Not resolved it to their satisfaction; or
(c) Not responded to it for 30 days
The complaint may be about:
Delay in settlement of claims, beyond the time specified in the regulations, framed under the IRDAI Act, 1999.
Any partial or total repudiation of claims by the Life insurer, General insurer or Health insurer.
Any dispute about premium paid or payable in terms of insurance policy
Misrepresentation of policy terms and conditions at any time in the policy document or policy contract.
The legal construction of insurance policies in so far as the dispute relates to claims.
Policy servicing related grievances against insurers and their agents and intermediaries.
Issuance of life insurance policy, general insurance policy including health insurance policy which is not in conformity with the proposal form submitted by the proposer.
Non-issuance of insurance policy after receipt of premium in life insurance and general insurance including health insurance and
Any other matter resulting from the violation of provisions of the Insurance Act, 1938 or the regulations, circulars, guidelines or instructions issued by the IRDAI from time to time or the terms and conditions of the policy contract, in so far as they relate to issues mentioned above.
The settlement process conducted by the Ombudsman
The Ombudsman will act as mediator and
- Arrive at a fair recommendation based on the facts of the dispute
- If you accept this as a full and final settlement, the Ombudsman will inform the company which should comply with the terms in 15 days
- If a settlement by recommendation does not work, the Ombudsman will pass an award within 3 months of receiving all the requirements from the complainant and which will be binding on the insurance company
Once the Award is passed:
- The Insurer shall comply with the award within 30 days of the receipt of the award and intimate the compliance of the same to the Ombudsman.
- Consumer Court
If the complaint has not been resolved by approaching the IRDA or the insurance ombudsman, a complaint can be filed with the appropriate consumer forum. The Consumer Protection Act, 2019 (“CPA”) promulgates a three-tier quasi-judicial mechanism for redressal of consumer disputes namely district commissions, state commissions and national commissions. The CPA also stipulates the pecuniary jurisdiction of each tier of consumer commission.
District Commission: A complaint can be filed when the total value of the insurance claim is less than Rs. 50 lakhs.
State Commission: A complaint can be filed when the total value is more than Rs. 50 lakhs but less than Rs. 2 Crore.
National Commission: A complaint can be filed when the total value is more than Rs. 2 Crore.
In the case of New India Assurance Co. Ltd v. Balwinder Singh, FA-309/2013, Balwinder Singh (“Singh”) lodged a claim with New India Assurance Company Limited (“Insurance Company”) towards payment of hospital Mediclaim, however, he was unable to submit original bills since they were with the Motor Accidents Claims Tribunal (“MACT”). The claim was rejected by the deputy manager of the Insurance Company, against which Singh filed a complaint with the consumer forum alleging that the insurance company did not settle the Rs. 1 lakh claim after he filed the requisite documents (photocopies) regarding the hospitalisation of his wife who was admitted in a hospital. The Insurance Company denied the claim based on non-submission of documents and denied the remaining allegations.
The District Consumer Disputes Redressal Forum by rejecting the argument of the Insurance Company that the claim has been preferred from 2 sources namely, MACT and this commission, held that both the remedies are independent of each other and that the Insurance Company could have procured the certified copy of the bills from MACT itself, and therefore held that the argument of the Insurance Company to negate the claim on the grounds of non-furnishing of the original bill fails by directing the Insurance Company to pay Rs. 1 Lakh claim to Singh.
Preventive Measures For Consumers
While you do have legal recourse as a consumer, there are certain steps you may take to make sure that you prevent falling into a predicament as far as insurance is concerned. Here are some tried and tested preventive measures:
Ask The Insurance Agent For ID Proof
According to guidelines prescribed by the IRDA to all insurance agencies, all agents working on behalf of insurance companies need to undergo stringent training and also need to acquire proof of identification. If an agent approaches you, you should first ask for their ID, note down their details and call the customer care service number of the insurer to confirm their identity. This is a safety measure proposed to save you from falling victim to insurance fraud cases.
Never Pay in Cash
Paying cash in insurance transactions can never be an option. Also, to ensure that you are writing the cheque to the right account, you should call the customer care centre and confirm the details to be mentioned on the cheque. This will ensure that you do not unknowingly write a cheque to an agent who will deposit the funds under a similar-sounding name and fall victim to one of many possible insurance frauds. Even if an agent is representing a private firm, the details on the cheque should be for the insurance company and not for any such firm.
Do Not Disclose Details of Your Policy
Divulging details of your policy documents to an unknown third party is a surefire way of attracting insurance fraud cases. Sometimes, a fraudster might pose as an insurance agent, asking you for details about your policy. They can either pose to be consumer rights personnel or claim to be calling you from the service centre of the insurance provider. If they call and ask you if you have any complaints about your insurance policy, you should be on the red alert.
Purchase Insurance Policies Online
If you would altogether like to avoid the risk of insurance fraud and buy insurance policies without having to deal with an agent, you can instead, purchase your policy online. Not only will this cut out the middleman, but also guarantee a safe and transparent transaction. Make sure you follow the payment steps and do not disclose your credit card information to anyone. Also, check to confirm that you only make payments on the insurance provider’s recommended site, as it will have a secure SSL-enabled payment gateway.
Immediately Report Loss of a Policy Document
Fraudsters could get close enough to your policy documents and impersonate a claim on your behalf. For this reason, you should your protection reports in a bank locker, on the off chance that need be, and make duplicates of them too. Quickly tell the protection misrepresentation specialist if you lose or lose your records. By and large, you are expected to file an FIR, place an ad in the papers and furnish the guarantor with an indemnity bond on stamp paper.