United India Insurance Asked To Refund Excess Premium, Continue Health Insurance Policy on Original Terms
Moneylife Digital Team 15 May 2024
Upholding orders passed by fora below, the national consumer disputes redressal commission (NCDRC) directed United India Insurance Company Ltd to refund the excess premium charged from the policyholder for two years and pay Rs27,000 as compensation and cost of litigation. 
In an order last week, the NCDRC bench of air vice-marshal (AVM) J Rajendra (retd) (presiding member) says, "The Chandigarh district consumer disputes redressal commission-I issued a well-reasoned order based on evidence and arguments advanced before it. The Union Territory (UT) Chandigarh state consumer disputes redressal commission, after due consideration of the pleadings and arguments, determined that no intervention is warranted on the district forum's order. Also in the present case, no ground is made out for interference in the impugned orders passed by the fora below."
The case is related to the higher premium quoted by United India Insurance Company while renewing the Synd Arogya Scheme policy of Chandigarh-based Sukh Lal Soni and his wife, Adarsh Soni. 
About 10 years ago, the Sonis bought the health insurance policy from the insurer under the Synd Arogya Scheme with Syndicate Bank. The policy coverage was to be until 80 years of age, as per the brochure. 
However, when the policy was due for renewal on 18 July 2020, United India Insurance did not renew it on its original terms and conditions. Instead, it quoted a much higher premium, claiming that the scheme was no longer prevalent due to the merger of Syndicate Bank with Canara Bank. 
Further, Mr Soni averred that the policy was originally in the name of Adarsh Soni but was renewed in his name, who is older, possibly to charge a higher premium which was not the earlier practice. Being aggrieved, he filed a consumer complaint before the district forum.
United India Insurance contended that the policy held by the Sonis was under the Synd Arogya scheme, a tailor-made policy specifically designed under a group health insurance scheme in collaboration with Syndicate Bank. It says it entered into a memorandum of understanding (MoU) with Syndicate Bank to provide medical insurance to the Bank's staff and clients at agreed rates. 
It says, "The Union government's decision to amalgamate Syndicate Bank into Canara Bank from 1 April 2020 led to the termination of the corporate agency agreement between Syndicate Bank and the insurance company. This termination notice was received by the insurer on 21 March 2020. Following the termination of the corporate agency agreement, the insurer was unable to renew the policy of the Sonis at the same premium rates that were applicable during the existence of the agreement with Syndicate Bank. This resulted in the quoting of higher premiums for policy renewal."
On 8 February 2023, the district commission allowed the complaint in part. It directed United India Insurance to refund the excess premium charged from the Sonis for 2020-2021 and 2021-2022 and continue the insurance policy on original or existing terms and conditions. It also asked the insurer to pay Rs20,000 compensation for mental agony and harassment and Rs7,000 litigation cost to Mr Soni.
Being aggrieved by the order, United India Insurance filed an appeal before the state commission. 
While dismissing the appeal, the state commission observed that not even a single document had been placed on record by United India Insurance to convince it that the policy in question was issued on subsidised rates for the employees of the Syndicate Bank, which later merged with Canara Bank. 
"...on the other hand, it is found mentioned therein that the premium is attractive because of heavy group discount. In our considered opinion once such a discount has been given by the appellant at the initial stage in order to sell its insurance product to the group of employees of Syndicate Bank including Mr Soni, later on the insurer cannot wriggle out of the same, by terming it as subsidy. As such, plea taken by the counsel for the insurance company in this regard stands rejected," it added.
Further, quoting from a circular issued by the insurance regulatory and development authority of India (IRDAI) (circular No. IRDAI/HLT/REG/CIR/049/03/2021 dated 16 March 2021), the state commission stated that general and health insurers are not allowed to modify the existing benefits, or add new benefits in the existing products which lead to imposing an increase in premiums. "There is nothing on record to prove as to on what basis United India Insurance had modified or revised the premium rates at such exorbitant rates, thereby violating the provisions of the IRDAI circular dated 16 March 2021. The district commission was also right in holding so."
United India Insurance approached NCDRC with its revision appeal. The counsel for United India Insurance asserted that the 16 March 2021 circular issued by IRDAI stipulates that insurers are not permitted to modify existing benefits or introduce new benefits in existing products that would increase premiums. 
However, he says that following the migration or merger of Syndicate Bank into Canara Bank, a new policy titled Family Medicare Policy 2014 was issued by United India Insurance with revised terms and benefits. "This new policy was effective from 10 July 2020 to 18 July 2021 and the premium applied was as per the terms of this new policy. The termination of the corporate agency agreement between Syndicate Bank and United India Insurance, as notified on 21 March 2020, was highlighted as a key factor influencing the policy renewal and premium adjustment."
The counsel further averred that United India Insurance provided a portability option to Mr Soni, indicating that a fresh proposal form needed to be filled, and the premium would be charged based on tariff and age considerations approved by the insurer. He further submitted that the premium charged under the previous policy (Synd Arogya) was based on subsidised rates agreed with Syndicate Bank for its employees and customers. In contrast, the new Family Medicare Policy 2014 was priced based on market rates approved by IRDAI. 
"The renewal of the policy in the name of Mr Soni instead of Ms Adarsh Soni was justified based on the proposal form filled by Mr Soni identifying himself as the primary insured and indicated Ms Adarsh Soni as a dependent," the counsel stated. 
After examining the pleadings and associated documents, including the orders of the district forum and state commission, AVM Rajendra (retd) observed that both the fora below have passed reasonable orders, and United India Insurance did not make any ground for interference by NCDRC in this case.
"It is a well-settled position in law that the scope for revision under Section 21(b) of the Consumer Protection Act, 1986 and now under Section 58(1)(b) of the Act, 2019 confers very limited scope and jurisdiction on this Commission. In the present case, there are concurrent reasoned findings of the facts, and the revisional jurisdiction of this Commission is limited. After due consideration of the entire material, I do not find any illegality, material irregularity or jurisdictional error in the impugned order passed by the learned state commission warranting our interference in revisional jurisdiction under the Act," the bench says, while dismissing the appeal filed by United India Insurance.
(Revision Petition No2352 of 2023 Date: 7 May 2024)
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