The Punjab State Consumer Commission has clarified that insurers cannot repudiate life insurance claims based on alleged pre-existing conditions beyond the 48-month window prescribed by IRDAI, reinforcing the burden of proof on insurers and limiting reliance on outdated medical records.
Background & Facts
The Dispute
The dispute arose from the repudiation of two life insurance claims by HDFC Life Insurance Company Ltd. following the death of Darshan Masih, a retired Punjab Police DSP, on 28.07.2017. Masih had purchased two policies in 2016 and 2017 under the HDFC SL ProGrowth Flexi plan, with sum assured amounts of Rs.8,00,000 and Rs.7,00,000 respectively. The insurer paid only the unutilized fund value - Rs.4,30,685 and Rs.2,36,647 - and repudiated the balance claims, alleging material concealment of pre-existing heart disease.
Key Facts
- Darshan Masih purchased Policy No. 18485183 on 12.01.2016 with sum assured of Rs.8,00,000 (Rs.28,00,000 surrender value)
- Policy No. 18140172 was purchased on 15.03.2017 with sum assured of Rs.7,00,000
- Proposal forms were completed online; Masih answered all health-related questions in the negative
- Masih died on 28.07.2017, less than one year after the second policy issuance
- Claim was lodged on 30.07.2017; insurer repudiated on 04.10.2017
- Insurer transferred Rs.4,30,685 and Rs.2,36,647 as unutilized fund value but withheld the balance sum assured
- Complainants sought payment of Rs.3,69,315 and Rs.4,63,353 as balance claims, plus Rs.50,000 as compensation for harassment
- Insurer relied on an investigation report by Renover Business Solutions Pvt. Ltd., citing medical records from 2002 - 2009 for CAD and prior heart attack
- No medical records were produced for the five-year period preceding policy issuance (2011 - 2016)
Procedural History
- 12.01.2016: Policy No. 18485183 issued
- 15.03.2017: Policy No. 18140172 issued
- 28.07.2017: Death of life assured
- 30.07.2017: Claim intimation submitted
- 04.10.2017: Insurer repudiated claim via letter
- 2019: Complaint filed before District Consumer Disputes Redressal Commission, Amritsar (C.C. No. 555/2019 and C.C. No. 556/2019)
- 03.11.2023: District Commission allowed complaint, directed payment of balance sum assured, 7% interest from date of filing, Rs.10,000 compensation, and Rs.5,000 litigation expenses
- 05.02.2024: First Appeal No. 84/2024 and First Appeal No. 85/2024 filed before State Commission
- 14.02.2024: 43-day delay in filing appeal condoned
- 17.03.2026: State Commission dismissed appeals and upheld District Commission’s order
Relief Sought
The respondents sought payment of the unpaid balance sum assured (Rs.3,69,315 and Rs.4,63,353), 7% interest from the date of complaint filing, Rs.10,000 compensation for harassment, and Rs.5,000 litigation expenses. The appellant sought dismissal of the complaint and return of the amounts already paid.
The Legal Issue
The central question was whether an insurer can repudiate a life insurance claim based on a pre-existing condition disclosed in medical records more than 48 months prior to policy issuance, in the absence of any treatment or diagnosis within the statutory window prescribed by IRDAI.
Arguments Presented
For the Appellant
The insurer contended that the insured had willfully concealed his history of coronary artery disease and a prior heart attack in 2002, violating the principle of uberrima fides. It argued that the investigation report and medical records from 2002 - 2009 established material concealment, and that the insured’s death within a year of policy issuance raised suspicion of fraudulent intent. It further claimed that the insured had purchased multiple policies in quick succession, indicating a pattern of opportunistic coverage.
For the Respondent
The complainants argued that no medical evidence existed to show treatment or diagnosis of any condition within the 48 months preceding policy issuance, as required by IRDAI Circular No. IRDAI/HLT/REG/CIR/225/08/2020. They emphasized that the insurer’s own proposal form asked only about conditions in the last five years, and the insured’s negative responses were truthful. The absence of any medical record between 2009 and 2016 negated any allegation of concealment.
The Court's Analysis
The State Commission undertook a rigorous analysis of the insurer’s burden of proof under consumer protection law and the regulatory framework established by IRDAI. It held that the insurer’s reliance on medical records from 2002 - 2009 - nearly a decade before policy issuance - was legally untenable. The Commission emphasized that the IRDAI Circular of 28.08.2020 explicitly defines pre-existing disease as any condition diagnosed or treated within 48 months prior to policy issuance. The insurer’s attempt to extend this period beyond the statutory limit was rejected as contrary to regulatory intent.
"The onus was upon the OP to prove such facts with medical record relating to the same period."
The Commission noted that the insurer failed to produce any medical record from the critical five-year window (2011 - 2016), despite the proposal form specifically asking whether the insured had undergone hospitalization or investigations during that period. The investigator’s report was deemed unreliable due to internal contradictions, including a claim that the insured was "brought dead" with "no history noted" in the hospital. The Commission also relied on its own prior decision in Bajaj Allianz General Insurance Limited v. Parveen Kumar Sood, which held that absence of treatment records within 48 months defeats a repudiation claim.
The Court further cited PNB Metlife Insurance Company Ltd. v. Vinita Devi to affirm that the burden of proving material concealment lies squarely on the insurer. It concluded that the insured’s death, while unfortunate, did not establish fraud in the absence of contemporaneous medical evidence. The District Commission’s appreciation of evidence was upheld as thorough and legally sound.
The Verdict
The State Consumer Disputes Redressal Commission dismissed both appeals and upheld the District Commission’s order dated 03.11.2023. The insurer was directed to pay the unpaid balance sum assured of Rs.3,69,315 under Policy No. 18485183 and Rs.4,63,353 under Policy No. 18140172, along with 7% interest from the date of complaint filing (2019) until realization. It was also directed to pay Rs.10,000 as compensation and Rs.5,000 as litigation expenses. The amounts deposited by the insurer - Rs.5,52,464 and Rs.7,13,152 - were ordered to be remitted to the District Commission for release to the complainants.
What This Means For Similar Cases
Pre-Existing Disease Claims Are Time-Bound
- Insurers cannot rely on medical records older than 48 months to repudiate claims, even for chronic conditions
- The IRDAI circular is binding; insurers must align policy terms and investigation protocols with its 48-month window
- Any attempt to invoke lifelong conditions as grounds for repudiation is legally invalid
Burden of Proof Remains With the Insurer
- The insurer must produce contemporaneous medical evidence from the 48-month window preceding policy issuance
- Investigative reports based on hearsay, outdated records, or uncorroborated third-party statements are inadmissible
- Negative responses in proposal forms are presumed truthful unless disproven by credible, time-bound medical evidence
Policy Language Must Match Regulatory Requirements
- Proposal forms must align with IRDAI’s definition of pre-existing disease
- Questions about "last five years" must be interpreted strictly; insurers cannot retroactively extend the period
- Non-compliance with IRDAI circulars exposes insurers to liability under consumer protection law
