How Apollo Munich Health Insurance tricked my client?

A few days back, I came across a shocking instance of wrongful termination of health cover by a leading private insurance company.

I consider this wrongful termination of the coverage based on the events that have unfolded before me. In light of greater information, I may change my opinion. However, at the moment, I do believe the insurance company is at fault in this case.

Here is the timeline of events:

1. On May 1, 2017, my client (let’s call him Amit) called up Apollo Munich customer care to purchase a popular health insurance plan. The annual premium was ~Rs 23,000.
2. He had a pre-existing condition which he disclosed to the customer care executive (let’s call him Darshi)
3. Darshi checked with his supervisor (let’s call him Javi) and replied that such condition was not an issue and that the policy could be issued. Everything was on “recorded line”.
4. Payment was made and the policy issued.
5. Fortunately (or unfortunately), Amit called me on May 1 and told that he had purchased the plan and disclosed the pre-existing condition over phone.
6. I asked him to drop an e-mail about his pre-existing condition and take acknowledgement from the company to avoid any issues later.
7. On May 2, Amit dropped an e-mail to Apollo Munich customer care with details about his pre-existing condition and sought acknowledgement.
8. On May 8, Apollo Munich dropped a bomb (in an e-mail) on Amit mentioning that his policy was terminated due to suppression of facts at the time of purchase of policy.
9. Moreover, the company declined to refund the premium. Rs 23,000 is not a small amount for a middle class family.

I copy an excerpt from Apollo Munich letter

In view of the above suppression of material facts, we hereby serve you this notice of 30 days for termination of your Policy (ab initio/last renewal date). Please note you are not entitled for any benefit under the Policy and the premium paid by you stands forfeited.

What I did?

When Amit informed me about the issue, I shot off an e-mail to grievance cell, customer care and Mr. Antony Jacob, CEO, Apollo Munich. I hope I had the CEO’s correct e-mail id.

I requested the following:

1. Either the cover should continue or the entire premium should be refunded.
2. A stern action against erring officials.

I got an e-mail from Apollo Munich that they will respond only to Amit as he is the customer. Fair enough. However, they have not provided any meaningful response to Amit either and only sought more time.

Don’t know if this is a trick.

In case the concerned officials did not convey proper information to the underwriting team, perhaps they can re-evaluate the decision by seeking more information about Amit’s medical condition.

If Amit wanted to hide his condition, why will he drop an e-mail the very next day? He merely wanted things on record.  If he had issues with the purchase decision, he could have returned the policy in the free-look period.

Final word is yet to be written in this case. I will update the post based on Apollo Munich’s response. I hope sense prevails.

Update (May 13, 2017): Apollo Munich has acknowledged its error and decided to refund the entire premium. The policy stands terminated. In their e-mail, the insurance company didn’t specify why they decided the refund the premium. They have also promised to take action against the erring officials. Persistence has paid off.

What is the bigger issue?

In this case, Amit chose to disclose the illness over e-mail the next day. Swift action got him the refund of premium.

In my opinion, Apollo Munich took a very smooth face-saving action. Their position was untenable. Premium taken and refunded. Case closed.

What if Amit had chosen not to drop an e-mail about the condition?

After all, he disclosed everything on phone, didn’t he?

In such a case, when he would have gone to make a claim in the future and such an illness would have come to light, his claim would have been rejected (in all likelihood).

This could have happened after 5-10 years. Premium for all these years would have gone down the drain.

Not just that, Amit would have been left down by the insurance company at the worst possible time.

Amit’s word against Apollo Munich executives’?

I was not part of the discussion between Amit, Darshi and Javi on May 1, 2017. Therefore, I cannot be sure if Amit was clear in his communication with the customer care executives. Therefore, the insurance company still has some benefit of doubt.

It does not matter if Amit seeks investment advice from me or if I trust him. If Amit didn’t disclose proper information at the time of purchase, the insurance company is well within rights to terminate the plan.

There is only one way of verifying this exchange of information, call records on May 1.  Did Apollo Munich go through call records on May 1 before sending policy termination letter? Only Apollo Munich can answer.

Till now, Apollo Munich has shown no interest in sharing such call details. Another problem is what actually got recorded. Perhaps, nothing was recorded. It is quite possible that sales people say such things just to give you confidence.

Apollo Munich, has in its response dated May 12, 2017, mentioned that it may consider sharing such voice logs with Amit. Personally, I feel the insurance company will not share the records.

My Learning from this Experience

To one of my other clients, an executive from a different insurance company advised not to disclose a particular health condition because that will result in denial of cover.

Given my inherent distrust towards insurance companies, I believe such instances are not isolated.

What I do not know if it is a case of a few rotten apples or does this have something to do with organization culture? It is possible that such aggressive sales at any cost approach is rewarded by the insurance companies.

Please understand such executives have sales targets and will do anything to make a sale. Of course, not everyone is bad.

What should you do?

I also acknowledge that many of us may not be comfortable entering details on the website at the time of purchase. You would rather give your health details over phone. However, you need to make sure that the details are correctly captured.

Here is what you can do:

1. Do NOT trust customer care executive in sales teams. Keep the conflict of interest in mind.
2. Do NOT let the sales executive decide what is material or not. If they had their way, even cancer will be immaterial. They have the incentive to make a sale.
3. Get everything on record. Let the underwriting team (and not the sales executive) decide if the illness/ailment is material or not.
4. Ask the executive to send you a copy of the proposal form over e-mail (before you make the payment). Verify the details before making the payment.
5. Before making the payment, send an e-mail to customer care detailing your condition. Mention names of the executives you are talking to. Seek acknowledgement before you make the payment.

I have read about instances where crooked insurance agents removed sheets about health disclosures before forwarding the proposal forms to the insurance company. This increased the chances of getting the policy issued. Clearly, the policyholder would have faced issues later.

Now you know that mis-selling can happen even if you purchase insurance online (or directly from the insurance company).

Caveat emptor.

Do note this is not a commentary on Apollo Munich or whether you should purchase insurance from the company. Such cases can happen with any insurance company.

You do not control what insurance companies will do. You can only control what you can do.

Make sure that you disclose complete medical information at the time of purchase of policy and ensure that such information is recorded.

Will be great if you could tell me

1. What else can be done in this case to get a fair resolution? Yes, Amit can write to IRDA or raise complaint on Integrated Grievance Management System (IGMS). That is an option once Apollo Munich responds negatively.
2. If you have been through such a case and how you responded? Others will learn from you experience.
3. Can First Information Report (FIR) be filed against the erring officials?

Book Suggestion: The Behavior Gap: Simple Ways to Stop doing Dumb Things with Money (Carl Richards)