Radhika Mittal
The Punjab State Consumer Disputes Redressal Commission, Punjab, has raised serious concerns over the rejection of insurance claims on unfounded substantiated grounds by insurance companies. The Commission emphasized the urgent need for the Insurance Regulatory and Development Authority of India (IRDAI) to issue stricter guidelines to ensure transparency and fairness in the claims process.
In a recent case involving HDFC ERGO General Insurance Company Ltd and HDFC Bank Ltd, the Commission’s President Justice Daya Chaudhary and Member Simarjot Kaur criticized the insurance company’s handling of a claim filed by Shubh Lata, whose late husband had secured a housing loan with a loan credit assure policy from HDFC ERGO. After her husband’s death in 2021 from renal failure and acute kidney injury, Lata’s claim to have the loan repaid under the policy was denied. The insurer argued that the medical conditions leading to his death were not covered under the policy’s “Major Medical Illnesses” category.
The District Consumer Commission had previously ruled in Lata’s favor, stating that the insurance company had arbitrarily rejected the claim. The district commission’s decision required HDFC ERGO to settle the loan amount and barred HDFC Bank from demanding payment from Lata. This ruling was subsequently appealed by both the insurer and the bank.
Upon review, the State Commission found held that the definitions of acute and chronic conditions indicated that the husband’s illness should have been covered under “major medical illness.”. The Commission criticized the insurer for failing to provide sufficient evidence to justify the claim denial and upheld the district commission’s finding of arbitrariness in the rejection process.
While the State Commission allowed HDFC Bank to claim the outstanding loan amount from either the insurance company or Lata, it upheld the complainant’s right to the insurance claim, thereby obliging HDFC ERGO to pay the loan amount.
This case highlights the necessity for IRDAI to enforce stringent measures to protect consumers from unfair claim rejections, as stated by the Commission in its ruling.
Name of the case : HDFC ERGO General Insurance Company Ltd and HDFC Bank Ltd vs. Shubh Lata
Bench: Justice Daya Chaudhary and Simarjot Kaur