Page 87 - DCOM309_INSURANCE_LAWS_AND_PRACTICES

Insurance Laws and Practices

Notes

Case Study Can an Insurance Company Independently Challenge
the Award under a Professional Indemnity Policy?

uring a gall bladder surgery, Mohinder Kaur developed ventricular tachycardia,
followed by ventricular fibrillation. She suffered cardiac dysrhythmia and went
Dinto coma due to medical negligence, becoming bedridden at the age of 45. A case
was filed against the surgeon, the anaesthetist and the hospital. The insurance company
was a party to the proceedings. The District Forum awarded a compensation of ` 2 lakh,
payable by the insurance company on behalf of the doctors under the professional indemnity
policy. This was challenged in appeal before the State Commission, which upheld the
Forum’s order. The doctors did not continue further litigation, but the insurance company
filed a revision petition before the National Commission.

Observing that it was incumbent on the insurance company to indemnify doctors under
the professional indemnity policy by paying the amount awarded by the consumer fora,
the commission stated the challenging of the order by the insurance company without
rhyme or reason is neither proper nor desirable. The commission expressed deep anguish
that such petitions were being filed. It observed that such cases are not meant to be fodder
for the legal department and the insurance company cannot go on a spree in filing such
petitions. The commission stated it was restraining itself this time, but warned that if such
petitions are filed in future, heavy cost would be imposed. The agony of a consumer must
end at some stage. It is the duty of the insurance company to see that frivolous cases were
not filed so as to clog the wheels of justice, which result in wastage of time. While dismissing
the revision petition, the commission directed the order be sent to the chairman-cum-
managing directors of all insurance companies. [New India Assurance Co Ltd v/s Hardip
Singh & Others – II (2003) CPJ 103 (NC)]
Question
Write down the case facts in your own words.

Source: http://www.business-standard.com/article/pf/case-studies-on-insurance-claims-111050500
049_1.html
5.7 Summary

The main objective of every insurance contract is to give financial security and protection
to the insured from any future uncertainties. Insured must never ever try to misuse this
safe financial cover.
Seeking profit opportunities by reporting false occurrences violates the terms and
conditions of an insurance contract.
An insurer must always investigate any doubtable insurance claims. It is also a duty of the
insurer to accept and approve all genuine insurance claims made, as early as possible
without any further delays and annoying hindrances.
Principle of Utmost Good Faith is a very basic and first primary principle of insurance.
The person getting insured must willingly disclose and surrender to the insurer his complete
true information regarding the subject matter of insurance.

In an insurance contract, the amount of compensations paid is in proportion to the incurred
losses. The amount of compensations is limited to the amount assured or the actual losses,
whichever is less.

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