KOCHI: The Ernakulam District Consumer Disputes Redressal Commission ordered Oriental Insurance Company to pay the full insurance amount, along with compensation and cost of proceedings, to a customer for denying full medical insurance claim.
The order was issued in a complaint lodged by Sabu U, a resident of Muvattupuzha, Ernakulam. Sabu had enrolled in the Happy Floater Mediclaim policy offered by Oriental Insurance, with a coverage limit of up to Rs 2 lakh. During the policy period, Sabu’s wife underwent cataract surgery on her right eye at a private hospital, incurring medical expenses of Rs 95,410. However, the insurance company approved only Rs 61,200. Sabu challenged this decision before the Insurance Ombudsman. However, the Ombudsman dismissed the complaint, agreeing with the insurance company’s contention. He then approached the commission, seeking payment of the remaining Rs 34,210, along with compensation and cost of proceedings.
The insurance company stated that the contract of insurance was governed by the specific terms and conditions of the policy. The company also argued that the policy did not cover expenses related to lenses which excludes costs for spectacles, contact lenses and others, and that “reasonable and customary charges” could not be paid as per the policy terms.
However, the Commission found that the insurance company’s reliance on the “reasonable and customary charges” clause without providing any concrete evidence to support their deductions constituted a deficiency in service. The company’s actions are inconsistent with the principles laid down by the Supreme Court in the Canara Bank case, which requires ambiguity in policy terms to be resolved in favour of the insured.
The commission directed the insurance company to pay Rs 34,210 to the complainant for the remaining claim amount. Additionally, the company was ordered to pay Rs 5,000 as compensation for mental agony, financial loss, and hardship caused by the deficiency in service and unfair trade practices. This compensation also accounts for the mental and physical hardships endured by the complainant. Besides, the insurance company shall pay Rs 5,000 to the complainant towards the cost of the proceedings.
The commission, headed by president D B Binu and including V Ramachandran and T N Sreevidia, observed, “It is all too common to see claimants struggling, moving from pillar to post, in their quest to obtain rightful medical reimbursements from insurance companies. This arduous journey, often undertaken by those already under the strain of medical and financial burdens, reflects a troubling reality in the insurance sector. The process, which should ideally provide relief and support, instead becomes a source of additional stress, undermining the very purpose of insurance – to offer security and peace of mind in times of need. This decision underscores the fundamental purpose of consumer protection laws to ensure fairness, justice, and empathy for all while highlighting the urgent need for a more empathetic and efficient approach from insurance companies to treat policyholders with the fairness and care they deserve.”