Proposal Form Crucial: NCDRC Orders Oriental Insurance to Honor Claim Due to Lack of Evidence

 

NCDRC Judgement Emphasizes Insurer's Duty to Prove Non-Disclosure

Introduction

The National Consumer Disputes Redressal Commission (NCDRC) has ruled in favor of the petitioner, Annamma Abraham, against Oriental Insurance Company Limited, underscoring the insurer's responsibility to produce the proposal form to substantiate claims of non-disclosure of pre-existing conditions. The judgement, delivered by Hon’ble Dr. Inder Jit Singh, highlights the burden of proof on the insurance company to establish the insured's alleged suppression of material facts.

Case Background

The petitioner, Annamma Abraham, had taken a "Happy Family Floater Policy" from Oriental Insurance for herself, her husband, and her daughter. The policy was initially taken in 2011 and renewed annually until 2014. On March 4, 2014, Annamma suffered chest pain and was admitted to Ramkrishna Hospital, Raipur, where she underwent treatment for a heart attack, incurring expenses of Rs. 2,85,858. The insurance claim was subsequently submitted but repudiated by the insurer on the grounds of pre-existing conditions, specifically diabetes mellitus, hypertension, and thyroidism, as stated in the discharge summary.

District Forum and State Commission Rulings

Both the District Forum and the State Commission dismissed the complaint, accepting the insurance company’s argument that Annamma had failed to disclose her pre-existing conditions. These decisions were challenged by the petitioner, leading to the present revision petition before the NCDRC.

NCDRC Observations and Ruling

The NCDRC critically examined the arguments and evidence presented by both parties. A key point of contention was the insurance company's reliance on the discharge summary, which noted that Annamma had been suffering from diabetes, hypertension, and thyroidism for 3-4 years and was on regular medication for these conditions.

The NCDRC observed that the insurance company failed to produce the proposal form, which would have shown whether the petitioner had made any false declarations regarding her health at the time of taking the policy. Despite being instructed to submit the proposal form during the hearing, the insurer admitted its inability to locate the document, citing the lapse of almost a decade since the policy was first issued.

Significance of the Proposal Form

The judgement emphasized the critical role of the proposal form in determining the validity of claims of non-disclosure. The NCDRC stated, "In the absence of the proposal form and the requisite medical records of the prior treatment, the insurance company has not been able to establish with reliable and cogent evidence that Petitioner / Complainant has suppressed material facts relating to pre-existing ailments." This lack of documentation undermined the insurer's position and led to the conclusion that the repudiation of the claim was untenable.

Conclusion and Order

The NCDRC set aside the orders of both the District Forum and the State Commission, ruling in favor of Annamma Abraham. The insurance company was directed to pay the eligible claim amount along with interest at 6% per annum from one month after the date of filing the claim until the date of payment. Additionally, if the payment is not made within 45 days from the date of the order, the interest rate would increase to 9% per annum.

Summary

The NCDRC's judgement in Annamma Abraham vs. Oriental Insurance Company Limited reinforces the principle that the onus lies on the insurer to prove non-disclosure of pre-existing conditions by producing the proposal form. This case underscores the importance of proper documentation and the insurer's duty to substantiate claims of non-disclosure with concrete evidence, thereby protecting the rights of the insured.

Case Title: Annamma Abraham vs. Oriental Insurance Company Limited REVISION PETITION NO. 773 OF 2017 Date of Oder 08 July 2024. Read the NCDRC order here.