Page 45 - The Insurance Times April 2025

tionally overlooked, the insurance company will not reject the judiciary is taking a balanced approach, favoring genu-
a claim solely on this basis. ine policyholders.

In case for health insurance, the situation is no different. Notes Yatharth Rohila, Advocate & Partner, Aeddhaas Le-
Non-disclosure of existing policies can indicate past claims gal LLP, “The ruling emphasized that the insurer must prove
or undisclosed health conditions, which can directly influenc- that the non-disclosure was intentional and had a material
ing underwriting decisions. If an individual withholds critical impact on their underwriting decision. Mere non-disclosure
medical history embedded in prior policies, insurers may without substantive proof of its impact is not enough to void
reject claims under misrepresentation clauses. a policy. This verdict underlines that insurance companies
cannot reject claims on technicalities unless they prove that
Will this be a deterrent for individuals from buy- the omitted information would have genuinely altered their
ing multiple policies? decision to issue the policy.”
According to Rakesh Goyal, Director, Probus Insurance, that
could very well be the case. “This could indeed deter some Does the disclosure of having multiple policies
individuals due to concerns about increased costs or reduced impact the premium payable by you for your
coverage. Policy holders may perceive that adding another newly-purchased term plan?
policy could lead to higher overall premiums, especially if
Marwah explains that a clean claims record or past insur-
insurers adjust rates based on the broader risk profile or over-
ance relationships typically do not impact premiums or cov-
lapping coverage. Alternatively, some might fear that inad-
erage unless there is a history of fraudulent activities, such
equate or incorrect disclosure of existing policies could com-
as false claims or data manipulation. In other words, pos-
plicate future claims, potentially resulting in delays, disputes,
sessing multiple policies is no grounds for any insurer to in-
or even denials.”
crease your premium payable.
However, other experts believe that this decision also reaf-
Narendra Bharindwal, Vice President, Insurance Brokers
firms the fact that not every omission by a policyholder in
disclosing existing life insurance policies amounts to "mate- Association of India (IBAI) also clarified that life insurers
primarily assess financial justifications rather than using prior
rial suppression," which could warrant policy cancellation.
policies to inflate premiums. In health insurance, past claims
As Alay Razvi, Managing Partner, Accord Juris, highlights, history may influence pricing, but merely holding multiple
this ruling sets a strong legal precedent for evaluating non- policies does not.
disclosure claims with a more rational and balanced ap-
However, Goyal says that this could very well backfire for
proach for insurers and policyholders. “It prevents insurers policy holders as well. “Disclosing a prior policy, such as Policy
from rejecting claims on a technical omission where there
is no actual impact on underwriting decisions. For policyhold- A, can materially affect both the premiums and the protec-
tion offered under Policy B. Insurers typically assess an
ers, there is a degree of protection against unfair claim
rejection since it emphasises the importance of full disclo- individual’s full insurance history to evaluate risk, which could
lead to adjustments in premium rates or coverage terms.
sure while also preventing insurers from exploiting minor
For instance, if Policy A reveals a history of frequent claims,
omissions,” he adds.
the insurer might increase Policy B’s premiums to offset the
Going ahead, consumers facing unfair claim repudiation perceived risk, or they could impose exclusions to limit over-
have strong grounds to challenge such decisions, given that lapping coverage."

Cooperatives to get own Insurance Firm: Shah

Union Home and Cooperation Minister Amit Shah announced in Parliament that the government will establish a co-
operative insurance company to facilitate insurance services within the cooperative sector. The new entity aims to
provide tailored insurance solutions for cooperative institutions, ensuring better risk coverage and financial security.
Shah emphasized that this cooperative insurance company will compete with private sector insurers and is expected
to emerge as a major player in the industry. “This initiative will empower cooperatives by offering them better insur-
ance coverage and financial stability, ultimately strengthening the sector,” Shah stated.

The Insurance Times April 2025 41