Renewal of health insurance cannot impose undisclosed cover cuts; prior intimation and informed consent are required.

A renewed health insurance policy with reduced and capped benefits was held unenforceable against the insured where the altered terms were not clearly disclosed before renewal and no real consent to the change could be inferred. Renewal alone did not amount to acceptance of a materially changed contract, especially where the insurer's materials indicated that existing policyholders would continue on existing terms unless they consciously migrated to a new product. The insurer's failure to communicate the material change also amounted to deficiency of service because the duty of utmost good faith required prior intimation of cover changes so the policyholder could make an informed choice.

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Issues: (i) whether the renewed health insurance policy with reduced and capped benefits bound the insured without prior intimation of the altered terms; (ii) whether the insurer's failure to disclose the changed terms amounted to deficiency of service.

Issue (i): Whether the renewed health insurance policy with reduced and capped benefits bound the insured without prior intimation of the altered terms.

Analysis: Renewal of an insurance policy cannot be treated as consent to a materially altered contract when the insured is not informed of the new restrictions. A unilateral mistake as to the terms of the policy does not automatically void the contract, but where the altered term was never brought to the insured's notice and no real consent to the change can be inferred, the restrictive condition is not enforceable. The insurer's own materials showed that existing policyholders were to continue on existing terms unless they consciously migrated to a new product.

Conclusion: The capped term on angioplasty coverage was not binding on the appellants in the absence of prior intimation and real consent, and the issue is answered in favour of the appellants.

Issue (ii): Whether the insurer's failure to disclose the changed terms amounted to deficiency of service.

Analysis: Insurance contracts are governed by utmost good faith, and that duty applies to the insurer as well as the insured. Material changes affecting cover must be disclosed at the stage of renewal so that the policyholder can make an informed choice. The insurer failed to show that the change was communicated through its agent or otherwise before renewal, and the non-disclosure deprived the appellants of meaningful choice. That omission fell within the statutory concept of deficiency of service and was inconsistent with the duty to provide material information to the policyholder.

Conclusion: The insurer was guilty of deficiency of service, and the issue is answered against the insurer and in favour of the appellants.

Final Conclusion: The adverse findings of the consumer fora below could not stand, the claim restriction was held unenforceable, and the insured were entitled to relief on the basis that the renewed policy had been altered without proper disclosure.

Ratio Decidendi: A material alteration in an insurance renewal is not enforceable against the insured unless it is clearly disclosed and accepted, because the duty of utmost good faith requires prior intimation of changes that affect the insured's choice and cover.

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