Moneylife IMPACT:

RAJ PRADHAN | 08/05/2014

National Insurance rejected cataract claim of a senior citizen on flimsy grounds of policy break-in due to gap of one day in renewal. Moneylife Foundation’s intervention helped him get Rs80,000 from the insurer

National Insurance Company (NIC) has paid Rs80,000 for cataract claim of both eyes to a senior citizen after Moneylife Foundation Insurance Helpline took up the case. In this case, the third party administrator (TPA), had rejected the claim citing one day delay in policy renewal.

It was a case of Heritage TPA (third party administrator) harassment of senior citizen even though they should know the rules of policy break-in. The TPA, while rejecting the claim had stated, “As per Department Office details received, policy is in first year as gap on renewal of policy is not condoned. As per policy terms and conditions, expenses related to cataract are not payable in first year of policy. Hence this claim is non payable and repudiated under clause 4.3.”

The TPA’s letter states that gap of one day in policy renewal was not condoned by the department office. It shows that NIC department office themselves are either ignorant of mediclaim rules or hand-in-glove with the TPA to deny the claim benefits of cataract procedure.

So, gap of one day in policy renewal is wrongly interpreted as if policy is in first year even though the insured was in third policy year. Cataract has two year waiting period and hence the insurer/TPA makes is non-payable with policy as if is in first year due to break-in of one day.

Moneylife Foundation Insurance Helpline reported the matter to NIC corporate office. They immediately emailed to division and regional office to pay the claim.

It is surprising that even after Insurance Regulatory and Development Authority (IRDA) guidelines effective October 2013, TPAs are still settling claims and sending rejection letters. Heritage TPA claims rejection letter to the policyholder is dated 14 November 2013. NIC and Heritage TPA were conveniently trying to reject claim even when the IRDA guidelines are clearly spelt. Will IRDA take cognisance of the TPAs doing business as usual and insurers not taking charge of claims settlement and denial?

Importantly, not many insured are really aware of the IRDA guidelines. Even the policyholder in this case was not aware of it, but was lucky to have approached Moneylife to seek clarity on the issue.

The case also highlights that you may not get condoned for any delay in genuine cases. Insurers are making it stringent for hospitalisation intimation and claims submission after discharge. Will genuine delay be condoned by department or regional office? You can never rely on it.

IRDA had issued renewability of Health Insurance guidelines with effect from 31 March 2009, allowing a grace period of 15 days for renewal of health insurance policies. This grace period was to condone delay in renewal of health policies up to 15 days for the sake of allowing continuity for waiting periods as well as pre-existing disease (PED) cover. However, any loss occurring during the grace period would not be covered as there is no valid insurance contract during the grace period. The grace period of 15 days was increased to 30 days during implementation of health insurance portability guidelines.

It clearly means gap of one day for policy renewal should not have restarted the waiting period for PED (pre-existing disease) or specific ailment. It only means that any claim arising for service done on that one day cannot be paid. It seems to be a silly reason to reject a claim as there is no question to ask for condone for one day gap in renewal. NIC should have paid the claim, but TPA did nothing for six months. Policyholder pleas to Heritage TPA were going nowhere.

These are the cases which make existing prospective customers stop trusting the insurance company, which is one of the reasons general insurance penetration in India is abysmal. There are apprehensions about insurance companies based on unfair claims rejection examples.


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