Insurance company has to reveal claim computation


If an insurance claim is partially repudiated, the insured has a right to know how the claim has been computed and the reason why it has been rejected, either fully or partially. If this information is not given, it may be a pointer that the insurance company has not computed the claim properly.

Case Study: Rohit Patel, a businessman and former president of Indian Merchant Chamber, frequently travels abroad. He was insured under Tata AIG’s Travel Guard Annual Platinum Policy valid from May 13, 2010 to May 2, 2011.

During a trip to USA, Patel fell sick and had to be hospitalized. ON August 28, 2010, a surgical procedure known as Endoscopic Retrograde Cholangiopancreatography (ERCP) with balloon extraction of bile duct stones with stent placement was performed on him under anesthesia.

The three-day hospitalization expenses came to US$ 23360.56. The claim was submitted to Tata AIG, and he presumed that it would be settled.

Months later, Patel was surprised to know from the hospital that only a part of the bill had been paid and a balance amount of US$9862.31 was outstanding. Patel asked the insurance company why he had not been informed about the partial settlement of the claim. He also demanded that the balance amount be paid to the hospital, or a computation be given to clarify the basis on which the claim had been partially settled. But Tata AIG gave an evasive reply without disclosing the claim calculation.

Patel then filed a complaint before the Mumbai Central district forum. He demanded that Tata AIG should either satisfactorily explain the computation of the claim, else pay the balance amount. The insurance company contested the complaint. It gave the details of the break-up of the claim-paid, but contended that it was in accordance with sub-limits stipulated under the policy. The company also argued that the dispute involved adjudication of complicated issues, which was not permissible under the CPA’s summary procedure.


The computation of the claim amount given in the reply before the forum revealed that the cost of the surgery had not been paid, even though the sublimit under the policy covered surgical treatment up to US$ 10,000. So, there was a short payment of US$ 9862.31.

Having been caught on the wrong foot, the insurance company now came up with a unique argument that there was no proof that ERCP under anesthesia is considered a surgery. This stand was falsified from the hospital bill, which included the surgeon and anesthetist’s charges for the ERCP.

On the basis of medical evidence, the forum concluded that ERCP was surgical procedure. It its judgment dated September 1, 2011, delivered by the presiding officer B S Wasekar for the bench, along with member H K Bhaise, the forum held that the insurance company was liable to pay for the surgery. Since the amount of US$ 9862.31 was within the coverage limit, the forum held that the entire amount would be payable by the insurance company directly to the hospital, and report compliance. Additionally, the forum awarded Rs 10,000 to Patel as compensation and Rs 5,000 as costs.

Conclusion: The consumer has a right to be informed about the manner in which his claim has been computed. Since the money has to be paid to the hospital, it is advisable to get the insurance company to pay the amount directly to the hospital in US dollars, so that fluctuation in currency rate would not affect the claim



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