On What Basis Insurance Policies Which Exclude Mental Illnesses From Full Coverage Approved?: Delhi High Court Asks IRDA

The Bench of Justice Prathiba M. Singh was hearing the plea of one Subhash Khandelwal who submitted before the Court that he had purchased an insurance policy from Max Bupa Health Insurance Company Limited and that he also paid the insurance premium for the sum assured of Rs.35 lakhs on regular basis.

Importantly, he submitted that when he raised a claim with the insurance company in respect of his mental illness, he realized that there was a clause in the policy restricting the sum assured to Rs.50,000/-, with a few conditions, in case of mental illnesses.

Court's observations

Having perused Section 21 (4)A of the Mental Healthcare Act, 2017, the Court noted that there could be no discrimination between mental illnesses and physical illnesses and the insurance provided in respect thereof.

Section 21 (4) A of the Mental Healthcare Act, 2017 reads as follows:-

Section 21. Right to equality and non-discrimination –

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(4) Every insurer shall make provision for medical insurance for treatment of mental illness on the same basis as is available for treatment of physical illness."

The Court observed,

"The clauses pointed out in the policy clearly show that a large number of mental conditions are excluded from full coverage of the policy and only a sum of Rs.50,000/- is reimbursable for these mental conditions."

Importantly, the Court also remarked,

"This matter requires consideration, inasmuch as the Insurance Regulatory and Development Authority of India ought to place on record the basis on which approval has been granted for such insurance policies."

Lastly, noting that a large number of insured persons would be affected by such an insurance policy, the Court directed that counter affidavit shall be placed on record within two weeks.

The matter has now been posted for further hearing on June 2, 2021.

In related news, last year the Supreme Court had issued notice to the Centre and the Insurance Regulatory Development Authority of India (IRDAI) in a plea seeking directions with respect to violation of Section 21(4) of the Mental Healthcare Act, 2017 whereby insurers are bound to provide medical insurance for the treatment of mental illness.

Advocate Mrinal Kanwar represented the Petitioner.

Case title - Subhash Khandelwal v. Max Bupa Health Insurance Company Limited & Anr. [W.P.(C) 4010/2021]

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