Health Insurance – For protection of Health but of WHOM – BANK OR UIIC ????
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Recently, IBA has issued communication No. CIR/HR&IR/J/2015-16/1169 dated October 1, 2016 (see the communication here) to its Member Banks intimating the adamant attitude of UIIC for not extending the policy for 30 days to enable IBA to discuss in its Managing Committee & with Member Banks. IBA further advised to pay renewal premium which is 112% higher and threatened Member Banks in the said communication as "In the absence of renewal of the policy, liability on account of hospitalization claims by employees post 30.09.2016 will have to be honored by banks." In the communication of IBA, it is also mentioned that 15 banks have remitted the premium for renewal as demanded by Insurer i.e. UIIC.
The efforts of IBA were supported by the workman Union by advising their units on 1/10/2016 "Our units in other Banks should immediately pursue the matter with their management to ensure that the policy is not allowed to lapse and employees do not get uncovered by the benefits of the policy." In the circular of Workmen Union (see the circular here), it is reported that 18 Banks have paid the premium. i.e. 15 reported by IBA and 3 more, Federal, UCo and Vijaya Bank. This facts itself reveals the role of Union to safe guard the Bank Employees to have continued cover.
The Officer Organization too issued communication to IBA on 1/10/2016 (see the communication here) to get "renewal of the Insurance Policy as per the original terms negotiated" and in the absence of which, IBA must decide taking a legal recourse against the Insurance Company or approaching Consumer Forum and also member Banks may immediately be advised to honour the claims of the employees to the debit of their establishment expenses.
Let us examine the facts from Insurance Company’s angle:-
The statement of premium received & claim paid is sourced from AIBEA circular No.27/210/2016/43 September 26, 2016 and same is as under:-
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While reviewing the table, surprisingly at Sr.No.37, the employees of IBA (non registered organization) are also covered in the Health Insurance Policy. The Medical Insurance Scheme was negotiated during 10th Bipartite Settlement and is, therefore, a part of the same. The 10th Bipartite Settlement took place on 25/05/2015 between Trade Union o Banks & Voluntary Association of Management of Bank [IBA] and IBA signed this Settlement on having Mandate from the Bank.
In this context, it is not clear which Union / Officer Association represented IBA Employees in the settlement and which authority has given mandate to IBA to sign Settlement on behalf of IBA Management. Further signatures on the settlement, reveals signatures of Managements of Banks & Trade Union / Association, does not reflect even remotely that settlement also covers IBA Employees. Thus act of IBA to cover its own employees is not only ultravires but also in violation of IRDA guidelines on Group Health Insurance more particularly clause 7 A of Health Insurance Regulations 2016 (see the Policy regulation here [caution: large 12MB document]) published in Government Gazette, which reads as under:-
"No Group Health Insurance Policy shall be issued by any Insurer where a group is formed with the main purpose of availing itself of insurance. There shall be clearly evident relationship as specified by the Authority from time to time between the members of the group and the group policy holder".
The above statement of premium and claim reveals the fact that Insurer has paid claims 172.35% of the claim received amount. It is not clear how much amount is contributed towards domiciliary treatment. Off course UIIC, which is in business of Insurance since 1938, being commercial organization is not expected to incur loss from the transaction and its act of increasing premium at renewal seems to be obvious, though illegal, arbitrary and against not only terms of contract but IRDA directives too.
The act of Insurer is illegal as it acts are violation of IRDA on following counts:-
1) Insurer cannot load premium more than 18% as agreed at clause 5.18 of the Policy Issued by the Insurer.
2) The act of the Insurer to revise premium upward with short notice is in violation of policy term reflected at clause 8 which clearly states that "We shall notify you of such changes at least three months before the revision are to take effect". Under these circumstances the act of Insurer to deny extension of cover for 30 days more to decide on renewal is absolutely illegal and arbitrary.
3) The act of the Insurer to enhance the premium 112% at renewal is in violation of regulation 10 [C] of Health Insurance Regulations 2016.
4) The Act of Insurer to enhance the premium by 112% is in violation of regulation 25 [ii] of Health Insurance Regulations 2016.
Now all the issue of enhanced premium of 112% has be raised at the time of renewal without giving 3 months notice to policy Holder and dictating policy holder to succumb to their illicit tactics.
Let us now clear what Supreme Court Says about "Renewal" of policy:-
"A renewal of an insurance policy means repetition of the original policy. When renewed, the policy is extended and the renewed policy in the identical terms from a different date of its expiration comes into force. In common parlance, by renewal, the old policy is revived and it is sort of a substitution of obligations under the old policy unless such policy provides otherwise. It may be that on renewal, a new contract comes into being, but the said contract is on the same terms and conditions as that of the original policy" [BIMAN KRISHNA BOSE Vs. RESPONDENT: UNITED INDIA INSURANCE CO.LTD. & ANR - Appeal (civil) 2296 of 2000]
The honorable J. Khare & Patil further made it clear that "Where an insurance company under the provisions of the Act having assumed monopoly in the business of general insurance in the country and thus acquired the trappings of the State being other authorities under Article 12 of the Constitution, it requires to satisfy the requirement of reasonableness and fairness while dealing with the customers. Even, in an area of contractual relations, the State and its instrumentalities are enjoined with the obligations to act with fairness and in doing so, can take into consideration only the relevant materials. They must not take any irrelevant and extraneous consideration while arriving to a decision. Arbitrariness should not appear in their actions or decisions. In the present case, what we find is that arbitrariness is writ large in the actions of the respondent company when it refused to renew the mediclaim policy of the insured on the ground of his past conduct i.e. having gone into litigation for payment of his claim against the respondent company. We are, therefore, in agreement with the view taken by the High Court that the order of the respondent company refusing to renew the medi-claim policy of the appellant was unfair and arbitrary".
Further Apex court while allowing the civil Appeal of Policy holder also allowed cost of Rs.5000/-. Incidentally, the respondent in above Civil Appeal and Lead Insurer in IBA induced / Introduced Health Insurance Scheme is UNITED INDIA INSURANCE only. (See the Copy of the Judgment here)
On 19/06/2013, South Mumbai District Forum ordered an Insurance Company [Pravin Shah Vs New India Assurance Company] ordered to refund the excess premium charged through loading.
It is illegal to refuse renewal of policy. So when an Insurance Company doesnot want to renew a policy that has become onerous, it adopts the backdoor method of loading the premium excessively, making it unaffordable for the insured, who may then voluntarily opt out. In present case, UIIC is adopting the same route.
The IBA is a voluntary association of Management of Banks and is expected to act in the Interest of Bank while dealing with the Insurer Company but on the contrary IBA is compelling its member to renew the Health Insurance Policy and pay insurance premium of Rs. 821 crores on renewal to UIIC.
IBA is so panicky for renewal of Health Insurance Policy and acting contrary to object for which it is formed.
The attached exhibit (See here) reveals that, Insurer had paid claim 72 % of above premium but premium is loaded 112%. WHY again 40% overloading???
1) BNP Paribas is eligible for 5 % discount but has to pay 112% more.
2) J & K Bank is eligible for no discount / No loading but still have to pay 112% more.
3) South Indian Bank & Catholic Syrian bank can be covered by loading 13% but still have to pay 112% more.
4) Karnataka Bank, City Bank and Karur Vyasya Bank can be covered by loading 15% but still have to pay 112% more.
5) Rest of the Member Bank can be covered by loading 18% as per clause 5.18 of the policy document which can be relied in case of dispute.
It is not clear why IBA doesnot want litigation with UIIC and on the contrary sue-motto appearing in Supreme Court in case of Retirees???
IBA, if it decides to take UIIC on task, can save Member Bank’s 435 crores, the amount asked by way of enhanced premium. If not ready to act as "INTELLIGENT BANKERS ASSOCIATION" will lead to straight way addition of Rs.155 crores profit to UIIC.
The core issue needs clarification from all concern is, on one side GOI is initiating measures to improve the profitability of Bank by subscribing capital to Bank and to make them Globally competitive and on the hand IBA is bent upon to add to the losses of its Member Bank which is against policy of GOI.
The real problem is ahead as the policy for retirees is due for renewal on 1/11/2016 and premium has to be paid by retirees, POOR retirees will have to accept this unreasonable premium which is not only exorbitant but equal to / double of their monthly pension / family pension and acts of UIIC / IBA and Bank raises doubt that whether the policy is implemented to protect the life of Retirees or to destroy them with a view to remove them from members of Pension fund????.
It is for the retiree organization to take the call and ensure that premium for retiree for renewal should not be enhanced as:-
1) The cover for domiciliary treatment is not extended to Retirees as extended to in service employees;
2) Only two members are covered in definition of family as against 5 members for in service employees; Alternatively, if premium is enhanced;
3) It should be fair, reasonable & to be borne by the Bank from welfare fund.
The IBA and Banks can settle the issue with UIIC just making them understand in clear Terms of NOT only opting out of the Health Insurance Policy BUT also STOPPING Insurance business to UIIC arising out of Banks Lending activity.
Note :- Author being resignee is not covered in the Health Insurance Policy, by Dena Bank. Also, Despite Policy Documents issued by UIIC covers the Resignee and 16 banks have extended the cover to this category. The views expressed are based on the contents agreed in the Policy and documents attached herein.
Disclaimer: [The articles written by author contains only the academic view of the writer and purely for discussions and updation of the knowledge of the bankers. The views expressed in the articles may not at all be subscribed by the organisation where the author is working and / or AllBankingSolutions.com]