×
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT

'Genetic disorder' can't be clause for insurance exclusion

Last Updated 21 March 2018, 19:27 IST

Repudiation of claims by insurance companies, especially on health insurance policies, is a regular feature. This is one of the top 10 issues agitating consumer forums. The reasons are not far to seek. The terms and conditions are unilateral, vague, ambiguous and complexly worded.

Policy buyers are forced to sign on the dotted line, fearing rejection of a policy itself. The list of diseases and ailments excluded exceeds the list of those covered. Further, the conditions of health policies are altered without informing the policyholder. How fair is it to exclude ailments arising out of genetic disorders?

In a judgement that could spur national debate, the Delhi High Court has said that discrimination in health insurance against individuals based on their genetic disposition or genetic heritage, in the absence of appropriate genetic testing and laying down of intelligible differentia, is unconstitutional and violates Article 14 and Article 21 of the Constitution. Article 14 of the Constitution prohibits discrimination of any kind.

This would include discrimination based on genetic heritage of an individual. It is well settled that the right to health is a fundamental right, as an integral part of Article 21, and right to healthcare is also a fundamental right. Quoting its earlier decision, the court said that an insurance policy has to stand the test of 'reasonableness'. It is a means of social security. Thus, the fact that an individual's genetic heritage could mean higher risk ought not to be used against the person in the matter of medical insurance.

The case leading to this decision relates to one Jai Parkash Tayal, who was suffering from Hypertrophic Obstructive Cardiomyopathy, a rare genetic disorder. He had obtained the policy in 2004 and renewed it from time to time and his claim was settled during 2006 for the same illness as the policy did not exclude claims relating to genetic disorders then.

However, the list of exclusions was expanded in 2011 to include genetic disorders, but the policyholder was not informed. The trial court which first heard the case held that insurance policy has to be renewed on existing terms and conditions and that at the time of renewal, fresh clauses and exclusions cannot be added.

While delivering this important judgement, the court has considered the insurance practices followed across the world relating to genetic disorders. It has observed that 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. 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 as a whole.

It is well-known that diabetes, attributed to genetic disorders, is covered by some insurance companies. Thus, there are several medical conditions that could be partially attributable to genetics but could also be attributable to several other factors, such as lifestyle, environmental conditions, dietary habits, etc. Hence the need for genetic testing.

The court has highlighted certain requirements to be fulfilled by insurance companies before rejecting a claim on the grounds of genetic disorder. Firstly, there has to be genetic testing. Second, the data collected from testing needs to be preserved and confidentiality maintained. Without following these steps and identifying the kind of genetic disorder which is excluded, applying a general exclusion would lead to arbitrariness.

What's IRDA doing?

The court has observed that the exclusion of genetic disorders in all forms would be contrary to public policy. Several of the prevalent medical conditions that affect a large mass of population, including cardiac conditions, diabetes, etc., could be classified as genetic disorders. The entire purpose of taking medical insurance would be defeated if all genetic disorders are excluded, the court said.

As a result, insurance companies cannot alter terms and conditions without informing policyholders. Exclusions are to be intimated at the time of issuing the policy. Secondly, the decision is bound to bring about changes in the insurance industry and the regulatory authorities. Insurers may collect higher premium for covering ailments arising out of genetic disorders. It is significant to note that the court has pulled up the Insurance Regulatory Development Authority (IRDA) for its failure to regulate the industry.

The judgement says that the ambiguity in the IRDA guidelines is working against the interest of consumers. There appear to be three regulations/guidelines issued by IRDA in respect of health insurance in 2001, 2013 and in 2016. While the 2013 guidelines have a vague mention of 'genetic conditions', along with congenital conditions, there is no mention of the same in the 2001 and 2016 guidelines. Even with regard to settlement of claims, the court has taken IRDA to task.

The court's observation is worth repeating. It has said "one of the prime duties of IRDA is settlement of insurance claims. Such settlement includes governing and regulating the exclusions in insurance contracts. Thus, IRDA ought to have supervised the manner in which the term genetic disorders is being misused by insurance companies to reject genuine claims. Obviously, IRDA has turned a blind eye…" The court has directed IRDA to re-look at the exclusionary clauses in insurance contracts and ensure that insurance companies do not reject claims on the basis of exclusions relating to genetic disorders. It has even asked lawmakers to take necessary steps in this regard.

Interpreting the exclusions in their widest terms, the court has said, "It is not merely a contractual issue between the insurance company and the insured, but spills into the broader canvas of right to health," and thus fall into the realm of public law. Reasonableness of such clauses is subject to judicial review. All said and done, it appears that the court is not against exclusions per se. It has only highlighted the need to have a proper framework to prevent against genetic discrimination, as also protect collection, preservation and confidentiality of genetic data.

(The writer is Member, Central Consumer Protection Council)

ADVERTISEMENT
(Published 21 March 2018, 19:02 IST)

Follow us on

ADVERTISEMENT
ADVERTISEMENT