In a move that will benefit health insurance policyholders, the insurance regulator has directed all insurance companies (life, general and standalone health insurers) not to reject any health insurance claim based on exclusions related to genetic disorder. The regulator’s order follows Delhi High Court’s judgement last month that the exclusionary clause of genetic disorders in the insurance policy is too broad, ambiguous and discriminatory, and hence violative of Article 14 of the Constitution of India.

The court had directed Insurance Regulatory and Development Authority of India (Irdai) to review the exclusionary clauses in insurance contracts and ensure that insurance companies do not reject claims on the basis of exclusions relating to genetic disorders. “All insurance companies are directed not to include genetic disorders as one of the exclusions in new health insurance policies issued in respect of all their existing health insurance products and also in the new products launched and/or filed under the provisions of Guidelines on Product Filing in Health Insurance Business,” the regulator’s circular says.

High court judgement

Justice Prathiba M. Singh of Delhi High Court delivered the 47-page judgement in a plea brought by Jai Prakash Tayal, who is suffering from Hypertrophic Obstructive Cardiomyopathy (HOCM), seeking damages of `7,78,864 from United India Insurance. Tayal took a mediclaim policy for himself along with his wife and daughter in September 2000 which had sum insured for Rs 5 lakh per individual from National Insurance Company Ltd. In 2004, he shifted the policy to United India Insurance after which the policy was renewed every year without any break till September 10, 2012.

As Tayal suffers from HOCM—a condition in which the heart muscle becomes abnormally thick—he was hospitalised in January 2004 and February 2006 and claims for both the periods (Rs 1,04,640 and Rs 3,30,000, respectively) were paid by the insurer. However, he was again hospitalised for treatment in November 2011 and this time the claim was rejected where the reasons for rejection were mentioned as: “We are closing your claim file, on account of the following reasons: TPA Vipun Medcorp had repudiated your claim. Since genetic diseases are not payable as per the policy, genetic exclusion clauses”.

In this case, the exclusion of genetic disorders was not a part of the initial policy which was availed by him but was added as part of the exclusions in a later policy document (in 2010) without any specific notice to him. On appeal, a trial court held that a policy has to be renewed on the existing terms and conditions, and at the time of renewal fresh clauses and exclusions cannot be added. The high court had observed that there are several medical conditions which could be partially attributable to genetics, but could also be attributable to several other factors, such as lifestyle, environmental conditions, dietary habits, etc. Detailed genetic testing is required in order to determine the nature of the genetic disorder. The court also noted that it would be medically impossible to determine whether a broad medical condition is a pure genetic disorder—solely attributable to a gene or to the several other factors which could contribute.

“The fact that there are different types of genetic disorders and even common diseases like diabetes and cardiac diseases could be included in the broad definition, makes the exclusion vulnerable. In effect, it would mean that large swathes of population would be excluded from availing health insurance which could have a negative impact on the health of a country,” it ruled.
Irdai’s standardisation guidelines

In 2013, Irdai had issued guidelines on standardisation in health insurance. The standardisation of health insurance had sought to remove ambiguity in settlement of health insurance claims by defining terminology, procedures for critical illness, pre-authorisation and claims form and even standard excluded expenses in hospitalisation indemnity policies. It had a specific exclusion in respect of pregnancy, infertility, congenital and genetic conditions, sex change surgery, cosmetic surgery and plastic surgery, refractive error correction, hearing impairment correction, corrective and cosmetic dental surgeries and organ donor expenses. The term genetic conditions was not defined in the guidelines. However, Irdai later permitted insurers to provide for exclusions based on genetic conditions and all general insurance companies have an exclusion on genetic conditions.

The court ruled that the broad exclusion of genetic disorders is not merely a contractual issue between the insurance company and the insured but spills into the broader canvas of right to health.