The Supreme Court has ruled that public sector insurance companies cannot refuse to provide medical cover policies to those suffering from pre-existing diseases and said such an action was arbitrary, illegal and unconstitutional.
A bench of Justices SB Sinha and VS Sirpurkar also asked the Insurance Regulatory Development Authority (IRDA) to frame suitable guidelines to ensure that insurance companies, both from public sector and private sector, do not indulge in the unethical practice of denying medical insurance facility to the public.
The apex court said public sector insurance companies in particular cannot indulge in such unhealthy practice as they are "State" within the meaning of Article 12 of the Constitution and were expected to be fair and reasonable in their dealings with the public.
"Only because the insured had started suffering from a disease, the same would not mean that the said disease shall be excluded. If the insured had made some claim in each year, the insurance company should not refuse to renew insurance policies only for that reason.," the bench said in its judgement.
The apex court passed the observation while dismissing a batch of petitions filed by public sector insurance companies against the Delhi and Gujarat High Court directions that they had no right to deny medical insurance facility to those suffering from pre-existing diseases or diseases contracted during the subsistence of a policy.