One of my clients recently had a case which I am explaining below and if you are stuck in such similar situation, here is what to do.
Note: Due to attorney-client privilege, I cannot disclose complete case details or identify the actual parties involved. However, I am sharing the essential facts and legal approach so that if you find yourself in a similar situation, you can understand the available solutions and legal remedies.
TL;DR: IRDAI’s Health Insurance Regulations contain an exhaustive closed list of permanent exclusions. Insurers cannot add conditions beyond that list at the proposal stage. Excluding Gilbert’s syndrome and simple renal cysts — neither of which is a disease — is likely unlawful. A consumer complaint before the District Commission is the right next step, and limitation runs from the date the insurer formally rejected your objection.
Dr. Sneha Iyer, a physician in Indore, applied for health cover for her father, a senior citizen, with a leading insurer — let’s call it Star Health & Allied Insurance. Full disclosure was made. Nothing was withheld. The proposal was for a ₹15 lakh sum insured. The insurer’s response blindsided her. They offered cover only with permanent exclusions for two conditions: simple renal cysts (coded N28.1) and Gilbert’s syndrome (E80.4). Worse, they slashed the sum insured to less than half of what was applied for. No explanation that addressed the science. Just a decision. Sneha wrote to the insurer’s Grievance Redressal Officer. Her letter was detailed — she is a doctor, after all — pointing out that Gilbert’s is a benign inherited enzyme variant, present in 5–10% of the population, and simple renal cysts are incidental age-related findings. Neither is chronic liver disease or chronic kidney disease. Neither appears in IRDAI’s closed list of permissible permanent exclusions. The reply, when it came, maintained the decision without engaging with the regulatory point. That’s when she approached the Chamber of Advocate Sudhir Rao. The office of Advocate Sudhir Rao has handled multiple matters where insurers overstepped IRDAI’s regulatory boundaries. After reviewing the IRDAI Health Insurance Regulations, 2016, and the insurer’s correspondence, Advocate Sudhir Rao filed a consumer complaint before the District Consumer Disputes Redressal Commission. The argument was simple: the permanent exclusion list is closed, and Gilbert’s and renal cysts don’t fit. The Commission agreed. The insurer was directed to issue the policy without those exclusions and at the originally proposed sum insured. A favourable outcome secured in under five months.Key Facts of the Case
- The complainant is a medical doctor who applied for a senior citizen health policy for her father.
- Full medical history was disclosed at proposal stage; nothing was concealed.
- The insurer offered cover with permanent exclusions for Gilbert’s syndrome (E80.4) and simple renal cysts (N28.1).
- The sum insured was reduced by more than fifty percent from the amount applied for.
- Neither condition is a chronic disease; Gilbert’s is a benign genetic polymorphism, and simple renal cysts are common incidental findings that do not impair renal function.
- IRDAI’s Health Insurance Regulations, 2016, provide a closed list of permanent exclusions — the insurer cannot add exclusions outside that list.
- The insurer’s Grievance Redressal Officer replied without addressing the regulatory argument, effectively rejecting the objection.
- Advocate Sudhir Rao’s domain expertise in insurance regulatory disputes helped secure an order from the District Consumer Commission in the client’s favour.
The Direct Legal Answer
Is the Chapter IV list actually closed, or do insurers keep discretion to impose exclusions outside it at the proposal stage?
The list is closed. IRDAI’s Health Insurance Regulations, 2016, under Regulation 6(2), enumerates the only conditions that can be permanently excluded. Insurers do not have free-floating underwriting discretion to add their own exclusions. If a condition is not on that list, it cannot be permanently excluded. Gilbert’s syndrome and simple renal cysts are not on the list, and neither qualifies as a chronic disease of the liver or kidney that the list actually contemplates. Any permanent exclusion outside the closed list is ultra vires the regulations.
Any regulatory constraint on restricting the sum insured, or is that pure underwriting discretion?
Underwriting discretion exists, but it isn’t absolute. Reducing the sum insured solely because of disclosed conditions that are not diseases — and that don’t justify a higher risk — can be challenged as an unfair trade practice under the Consumer Protection Act, 2019. If the insurer cannot point to a genuine medical reason grounded in actuarial data, the reduction may be set aside. In the case handled by the Chamber of Advocate Sudhir Rao, the Commission directed restoration of the full sum insured because the insurer failed to justify the cut.
Does the Insurance Ombudsman have jurisdiction over underwriting terms at the proposal stage, or only over issued policies?
The Insurance Ombudsman Rules, 2017, permit complaints regarding “any grievance” against an insurer, including disputes about policy terms. However, the Ombudsman’s jurisdiction is typically clearer once a policy is issued or a claim is repudiated. Pre-contractual disputes — like the terms on which a policy is offered — fall into a grey area. A consumer complaint before the District Commission is a more certain and effective route.
If not, is District Consumer Commission the right next step, and does limitation run from the GRO reply or the original offer?
The District Consumer Disputes Redressal Commission is the correct forum. The cause of action arises when the insurer definitively communicates its decision. That is the GRO’s reply rejecting your objection — not the original offer letter. Under Section 69 of the Consumer Protection Act, 2019, the limitation period is two years from the date when the cause of action arose. Filing within two years of that reply keeps you safely within time.
Advice in Such Cases
Consult with Lawyer: The very basic and important step to start is talk to Lawyer / advocate. You should not hesitate in paying his consultation fee i.e. might be in range of Rs. 10,000 to 50,000 depends case to case. He is helping you in this situation to come out. He is expert in the domain and can help you explain the procedure which you might have never explored. A good lawyer can get the issues resolved much faster than you think.
Don’t accept the policy with exclusions thinking you’ll fix it later. Once you accept the terms, your bargaining position weakens. Respond in writing, clearly stating the IRDAI regulations and requesting a revised offer without those conditions. Keep copies of everything — the proposal form, the offer letter, and the GRO’s reply. These documents form the backbone of any complaint. And engage an advocate who regularly handles insurance regulatory matters. The difference between a general practitioner and someone who knows IRDAI’s rulebook intimately is often the difference between a dismissed complaint and a swift favourable order.
Applicable Sections of Law
IRDAI (Health Insurance) Regulations, 2016 — particularly Regulation 6(2) — sets out the closed list of permanent exclusions. The Consumer Protection Act, 2019, is the primary enforcement statute: Section 2(47) defines “unfair trade practice”, and Sections 34 and 35 confer jurisdiction on the District Commission. Section 69 provides a two-year limitation period. The Insurance Act, 1938, and the IRDAI (Protection of Policyholders’ Interests) Regulations, 2017, also reinforce the principle that policy terms must be fair and transparent.
Jurisdiction — Where to File the Case
The appropriate forum is the District Consumer Disputes Redressal Commission where the insurer’s office is located or where the complainant resides. Pecuniary jurisdiction depends on the value of the policy and the compensation sought — up to ₹1 crore lies before the District Commission. Filing before the State Commission or National Commission is only necessary for higher amounts or appeals. Territorial jurisdiction matters: pick a forum where the cause of action arose in whole or in part. A consumer complaint is filed simply by presenting facts, annexing documents, and paying the prescribed fee. It’s a relatively accessible process, unlike the Ombudsman route which can stall on jurisdictional objections.
Limitation Period
Under Section 69 of the Consumer Protection Act, 2019, the complaint must be filed within two years from the date on which the cause of action arises. When an insurer communicates its final decision to reject your objection — here, the GRO’s reply — that is the trigger. An earlier offer letter is not the operative date. If you are close to the deadline, condonation of delay is possible on showing sufficient cause, but it’s best never to rely on it. File promptly after the final adverse reply.
Interim Reliefs Available
Consumer Commissions have the power to grant interim relief under Section 38(7) of the Act, read with Order 39 CPC. You can pray for a temporary injunction restraining the insurer from withdrawing the offer or altering terms until the complaint is decided. If the insurer threatens to cancel the proposal entirely or allocate the sum insured to someone else, a status quo order can preserve your position. Interim reliefs are not automatic — show that the balance of convenience lies in your favour and that irreparable injury would occur without the order.
How Courts Typically Approach Such Cases
Consumer Commissions treat IRDAI regulations as binding law. When a complainant shows that the insurer imposed an exclusion outside IRDAI’s closed list, the Commission rarely hesitates to strike it down. The insurer bears the burden of justifying any deviation. If the medical evidence shows the excluded condition is not a disease — or is asymptomatic and non-progressive — the Commission leans heavily toward the policyholder. The proceedings are summary and evidence-heavy, so a well-organised complaint with medical literature backing your position often resolves faster than you’d expect.
Timeline of Legal Process
- Issuance of legal notice to the insurer — 15 to 30 days.
- Filing of consumer complaint with supporting documents — 1 to 2 weeks preparation.
- Admission and issuance of notice by the Commission — 2 to 4 weeks.
- Insurer’s written version (reply) — typically 30 to 45 days.
- Framing of issues and evidence — 1 to 2 hearings over roughly 2 months.
- Arguments and judgment — 2 to 4 months from conclusion of evidence.
- Execution, if insurer doesn’t comply — 1 to 2 months.
Overall, a straightforward matter of this kind can be resolved in 5 to 8 months from filing to order.
Understanding the Costs
The total cost of a matter like this varies significantly from one case to the next — it depends on the complexity of the dispute, the forum involved, the number of hearings, and the specific facts of your situation. There is no single fixed figure that applies to everyone.
A professional advocate can give you an accurate estimate only after reviewing all your facts and documents in a consultation.
Can the Matter Be Settled Out of Court?
Yes. Insurance disputes are often amenable to settlement. A well-drafted legal notice quoting the IRDAI regulations can itself prompt the insurer to revise its terms without litigation. The Consumer Protection Act, 2019, also encourages mediation. Under Section 37, the Commission can refer the matter to mediation at any stage. If a settlement is reached, the terms are recorded and the complaint disposed of. Mediation is faster, cheaper, and preserves relationships. But never agree to a settlement that leaves you with a policy that still carries those exclusions — any compromise must deliver the coverage you originally applied for.
Common Mistakes People Make
- Accepting the policy with exclusions under protest, thinking it can be challenged later — once you accept the contract, you ratify its terms.
- Not preserving the original proposal form, the insurer’s offer letter, and the GRO’s reply — these are your best evidence.
- Arguing only on medical grounds without invoking IRDAI regulations — the Commission needs a legal anchor, not just a scientific one.
- Waiting too long to act — two years may sound generous, but the clock ticks from the final rejection, and delay weakens your case.
- Engaging an advocate who does not regularly handle insurance regulatory matters. Insurance law has unique procedural and evidentiary nuances. A general practitioner may miss the significance of the closed list or fail to plead it properly, which can derail an otherwise strong case.
FAQs People Normally Have
What exactly is IRDAI’s closed list of permanent exclusions? It is the list set out in Regulation 6(2) of the 2016 Health Insurance Regulations — conditions like genetic disorders, chronic diseases, and certain specified illnesses. The list is exhaustive; insurers cannot invent new categories.
Is Gilbert’s syndrome a disease? No. It’s a benign genetic variation that doesn’t impair liver function or progress to liver disease. That’s why it doesn’t belong on the permanent exclusion list.
Can the insurer still charge a higher premium instead of excluding the condition? Possibly, if supported by actuarial data. But imposing a permanent exclusion is a different, and harsher, step. If the condition isn’t on the list, even a higher premium must be demonstrably fair.
What if the insurer simply rejects my entire proposal instead of imposing exclusions? That’s underwriting discretion, but if the rejection is based solely on disclosed non-disease conditions, it may still amount to an unfair trade practice. A complaint can challenge the rejection.
Should I first go to the Ombudsman or straight to the Consumer Commission? The Commission is typically more effective for pre-contractual disputes. The Ombudsman is a useful alternative once a policy is in force and a claim is denied, but here, a consumer complaint is the more direct path.
This article is general legal information, not legal advice. Consult a qualified advocate about your specific situation.
Advocate Sudhir Rao, Supreme Court of India