Name – Oindrila Karmakar

PRN- 21040141006
Div.- A
SIHS (Pune)
Health Insurance -2
Case Study Analysis
Dr. Shanthi Rangarajan vs The Oriental Insurance Company

• Underwriting lapses
1. There was no genetic testing applied before the insurance policy was given to Dr.
Shanthi Rangarajan. This demonstrates that family history, rather than a specialised
test, was used to exclude genetic disorders from consideration.
2. There was no proper verification of the medical history done by the underwriter.
Hence the underlying risk of the genetic disorder was not assessed. Therefore, nor
the premium was not charged accordingly neither the coverage limitations were
imposed as per terms.

• Role of Insurance providers in controlling underwriting lapses

1. If there is an exclusion in the genetic disorder, then there should be mandatory
genetic testing before issuance of the claim. And premium should be charged
accordingly.
2. Proper verification of documents and evaluation of required information should be
done about the potential client to assess possible underlying risks.
3. Risk policies should set out the conditions and guidelines for the identification,
acceptance, monitoring and management of risks. These policies should be
communicated regularly throughout the organisation and should be revised
periodically to take into account changing internal and external circumstances.

• Basis of claim repudiation

The Insurance sector in India is regulated by The Insurance Act, 1938 which envisages the
establishment of the IRDAI. The IRDA had issued guidelines on standardization in health
insurance dated 20th February, 2013, which had a specific exclusion in respect of
'pregnancy, infertility, congenital and genetic conditions". However, the term 'genetic
conditions' is not defined in the guidelines. Thus, at the relevant point the IRDA itself
permitted Insurance companies to provide for exclusions based on genetic conditions.
As per the terms of the policy issued by The Oriental Insurance Company the
genetic disorders are excluded in the terms of the agreement entered between the parties.
When insurance claim made by the Dr. Shanthi Rangarajan for the reimbursement of the
expenses incurred towards the treatment given to the petitioner's son for familial
adenomatous polyposis syndrome disease, it was repudiated because genetic disorders are
not covered under the Insurance.

• Basis of the decision of the court

1. The Oriental Insurance Company is a public sector undertaking. duty. Therefore, the
respondent Insurance Company is subject to writ jurisdiction where an aspect of
public duty and obligation may be linked to its actions. Moreover, since this case
does not involve any disputed question of fact, according to Article 226 of the
Constitution the High Court can entertain the writ petition.
 2. Right to Health is an integral part of Right to Life. 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 must be based on empirical
testing and data and cannot be simply based on 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

• Ways to manage such cases in insurance companies

1. 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. Therefore, a proper framework needs to be
framed to prevent against genetic discrimination and to protect collection,
preservation, and confidentiality of genetic data
2. IRDAI should re-look at the Exclusionary clauses in insurance contracts and ensure that
insurance companies do not reject claims based on exclusions relating to genetic
disorders.
3. Insurance companies should structure their contracts based on reasonable and
intelligible factors which should not be arbitrary and in any case cannot be
'exclusionary'. Such contracts must be based on empirical testing and data and
cannot be simply based on subjective or vague factors.
4. Proper verification of documents and evaluation of required information should be done
about the potential client to assess possible underlying risks. And premiums should be
charged accordingly.