Baseless Claim Rejections: Punjab Consumer Forum Urges IRDA Intervention Against Insurance Companies

The State Consumer Disputes Redressal Commission of Punjab has raised concerns over insurance companies rejecting customer claims on unjustified grounds. Commission President Justice Daya Chaudhary and Member Simarjot Kaur urged the Insurance Regulatory and Development Authority (IRDA) to enforce stricter guidelines to prevent such unfair practices and ensure transparency in claim processing.

The Commission highlighted the issue while addressing appeals from HDFC ERGO General Insurance and HDFC Bank against a district consumer commission’s order. The case involved Shubh Lata, whose husband had insured his housing loan with HDFC ERGO. After his death from renal failure, the insurance company denied her claim, stating his condition wasn’t covered under “Major Medical Illnesses.”

The district commission had ruled that the insurer arbitrarily rejected the claim in collusion with the bank and ordered HDFC ERGO to pay the loan balance. Upon appeal, the State Commission reviewed medical definitions and determined the husband’s condition should have been covered under the policy.

The State Commission upheld the district commission’s decision, criticizing the insurance company for lacking valid justification for the claim denial. However, it modified the district commission’s directive regarding the bank’s right to recover the loan, allowing HDFC Bank to claim the outstanding amount from either the insurer or the complainant. The imposed compensation and litigation expenses against HDFC Bank were also set aside.

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