Exclusionary Clause of Genetic Disorder in Insurance Policy- SC stays Delhi HC Order

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August 30, 2018

Case name: The United India Insurance Co. Ltd. v. Jay Parkash Tayal

The Three-Judge Bench of the Supreme Court in its order of August 27 has partially stayed Delhi High Court’s order of March this year, whereby the High Court had held that the Exclusionary clause of `genetic disorders’, in the insurance policy, is too broad, ambiguous and discriminatory – hence violative of Article 14 of the Constitution of India and directed the IRDA to re-look at the Exclusionary clauses in insurance contracts and ensure that insurance companies do not reject claims on the basis of exclusions relating to genetic disorders.

Read Delhi High Court’s order here- Genetic Disorder Exclusionary Clause in Health Insurance Policy is Unconstitutional.

The Supreme Court has put a stay on Delhi High Court’s order to the following extent:

  • Right to avail health insurance is an integral part of the Right to Healthcare and the Right to Health, as recognised in Art. 21 of the Constitution;
  • Discrimination in health insurance against individuals based on their genetic disposition or genetic heritage, in the absence of appropriate genetic testing and laying down of intelligible differentia, is Unconstitutional;
  • The broad exclusion of genetic disorders’ is thus not merely a contractual issue between the insurance company and the insured but spills into the broader canvas of Right to Health. There appears to be an urgent need to frame a proper framework to prevent against genetic discrimination as also to protect collection, preservation and confidentiality of genetic data. Insurance companies are free to structure their contracts based on reasonable and intelligible factors which should not be arbitrary and in any case cannot be ‘exclusionary. Such contracts have to be based on empirical testing and data and cannot be simply on the basis of subjective or vague factors. It is for lawmakers to take the necessary steps in this regard.
  • The Exclusionary clause of genetic disorders’, in the insurance policy, is too broad, ambiguous and discriminatory hence violative of Art. 14 of the Constitution of India;
  • Insurance Regulatory Development Authority of India (IRDA) is directed to re-look at the Exclusionary clauses in insurance contracts and ensure that insurance companies do not reject claims on the basis of exclusions relating to genetic disorders.

The aforesaid directions of the High Court has been stayed by the Apex Court till further orders.

The Supreme Court’s order can be accessed here.

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