Monday, November 16, 2009

Does your insurer provide your medical report?

insurance ombudsman

Last week, my friend Hemant approached me with a problem which may sound mundane, but caused him a lot of trauma, courtesy an insurance company. Acting on my advice, he bought a term insurance policy as I always thought it was important even though he had an impressive profile -- age 42, high-placed professional in an MNC bank, decent income, good savings, low debt, and to top it all, a fitness buff. Based on this, I had recommended him an amount which ran into crores as sum assured.

So I was surprised when an anxious Hemant called to tell me there was a problem.

Hemant had filled up the form, paid the premium and undertaken a battery of medical tests. Given the size of the policy, he had to answer quite a few questions, besides having the company's personnel visit his office to verify details.

The process was completed smoothly and it was time for him to receive the policy. Then came the shocker, with the insurance company informing Hemant they would be charging him a higher premium. Reason? There were some issues with his medical reports, so he would be required to pay extrato get the policy and the insurer wanted his approval in the matter.

At this point, Hemant was anxious to find out what these health-related issues were, rather than talk about the policy. But when he asked for his medical reports, the insurance company informed him that his medical reports were their property and cannot be divulged. He was aghast.

When Hemant mentioned this to me, I made my research team to do a quick check on the practices followed by various insurance companies in disclosing medical reports to the insured.

They informed me that most companies will provide a photocopy of the medical reports on request, whereas one company was willing to provide copies only to the family doctor named in the insurance proposal form. But the company chosen by my friend was an exception and did not provide reports to the insured at all.

A quick look at the Insurance Act, 1938, showed that Section 51 of the act requires an insurer to supply the "policy holder" with the medical reports. So, legally speaking, Hemant was entitled to a copy of his medical reports after paying a princely sum of Re 1, once he became a "policy holder", which means after he paid the extra premium and took the policy.

In case the company still refused to give him the medical report, he could have to file an official complaint on the insurance company's website. In case that did not elicit any response, he would have to file a complaint with the insurance ombudsman or the alternative grievance redressal mechanism of Irda.

By this time Hemant and his wife were very worried and had decided to repeat all the tests at his cost as he did not want to wait for the insurance company to follow-up on his request.

I told them not to worry much as it was unlikely there would be anything seriously wrong-- if that was so, the insurance company would have declined to issue the policy, rather than charge an extra premium.

I asked him to instead follow-up with the insurance company after he took the policy, since those reports would also serve as a very useful checking point against any reports that he would obtain on his own.It is unfortunate that Hemant had to go through this distressing experience. Let's hope other consumers are spared such an experience.