A typical insurance policy document announces its benefits in big, bold typeface, usually accompanied by smiling faces. But the ‘terms and conditions’ attached with the benefits come in fine print, mentioned either at the back of the policy brochure or in the proposal form, or in one of the multiple ‘formality’ documents one is told to fill up at the time of subscribing to a policy. Often, insurance firms cite the fine print to deny claims.
Holding the fine print terms as “unconscionable” and “meaningless”, the consumer forum headed by Judge C K Chaturvedi and members S R Chaudhury and Asha Kumar have slapped punitive damages worth Rs 65,000 for “harassment, deficiency, unfair trade practice...and litigation expenses” against an insurance company.
The case relates to medical insurance cover for a patient who had undergone cataract surgery. The patient, a woman, had a policy from Royal Sundaram Alliance Insurance Company. The cost of surgery came to around Rs 90,000. But the firm said it could not reimburse more than Rs 7,500 under the mediclaim policy.
The consumer forum asked the insurance company to reimburse the entire sum on the ground that the note on the policy’s cover did not mention the limit for cataract operations.
While submitting its response in the case, the company reproduced the terms and conditions of the policy in bigger, bolder font. The court noted, “This is nothing but a deliberate attempt to keep stringent conditions away from the eye of the insured, as far as possible. This is (true) with all insurance companies, as we observe daily.”
The court also rejected the plea that the terms and conditions were part of a “conscious” contract between the company and the customer. “These terms and conditions need to be shown as duly explained and accepted... they are one-sided... in fine print... and consumers have little choice but to accept,” the court observed.
There are other examples:
* A man had invested Rs 59,820 in an insurance policy, Kotak Capital Multiplier Plan of Kotak Mahindra Mutual Life Insurance Ltd. He was told his money would double in five years. On maturity, he was paid Rs 52,800. Last month, the consumer forum pulled up the company for selling the policy to the man through unsolicited calls and, on maturity, paying him less than his investment. The forum said the name of the policy itself was misleading. The company was fined Rs 7 lakh.
n A doctor’s hospitalisation expenses came to nearly Rs 42,000. His insurance company refused to reimburse the cost on the ground that he had not given the company a week’s notice before hospitalisation. The consumer forum asked the insurance firm to cough up around Rs 25,000 in compensation in addition to paying the claim amount.
Insurance companies blamed the rising number of court orders going against them on their clients. “When people buy policies, they only look at the benefits though they know there are several limitations to them... and later when the claim gets rejected, they approach the courts,” Vijay Bhatt, area manager at Royal Sundaram, said.