Is Insurance a Fundamental Right?

This aspect was discussed by the Supreme Court (SC) in the case L.I.C. Of India & Anr vs Consumer Education & Research,1995 AIR 1811, 1995 SCC (5) 482. The SC in this case had to examine the selection of risks and the actuarial approaches of LIC in those days. In para 58 the SC stated: “We have given our anxious and careful consideration to the respective contentions, since our answers to the questions involved are bound to have far reaching effect on the business of life insurance, we have minutely examined all the questions bearing in mind the larger public interest. Life insurance policies based on actuarial Tables and the Policy Holders' needs suited to their requirements…”

The SC looked at the Constitution provisions for further guidance. It stated: “The Preamble, the arch of the Constitution, assures socio- economic justice to all the Indian citizens in matters of equality of status and of opportunity with assurance to dignity of the individual…. Article 38 in the Chapter of Directive Principles enjoins the State to promote the welfare of the people by securing and protecting effective social order in which socio-economic justice shall inform all the institutions of the national life. It enjoins to eliminate inequality in status, to provide facilities and opportunities among the individuals and groups of the people living in any part of the country and engaged in any avocation. Article 39 assures to secure the right to livelihood, health and strength of workers, men and women and the children of tender age. The material resources of the community are required to be so distributed as best to subserve the common good. Social security has been assured under Article 41 and Article 47 imposes a positive duty on the State to raise the standard of living and to improve public health.”

“In Murlidhar Dayandeo Kesekar v. Vishwanath Pandu Barde (C.A.No .952/77) on February 22, 1995, this Court held that right to economic empowerment to the poor, disadvantaged tribes and depressed and oppressed Dalits, is a fundamental right to make their right to life and dignity of person meaningful and worth living.”

The SC concluded: “We have, therefore, no hesitation to hold that in issuing a general life insurance policy of any type, public element is inherent in prescription of terms and conditions therein. The appellants or any person or authority in the field of insurance owe a public duty to evolve their policies subject to such reasonable, just and fair terms and conditions accessible to all the segments of the society for insuring the lives of eligible persons. The eligibility conditions must be conformable to the Preamble, fundamental rights and the directive principles of the Constitution. The term policy under Table 58 is declared to be accessible and beneficial to the large segments of the Indian society. The rates of premium must also be reasonable and accessible…. It may be made clear that with a view to make the policy viable and easily available to the general public, it may be open to the appellants to revise the premium in the light of the law declared in this judgment but it must not be arbitrary, unjust, excessive and oppressive." This case has been cited even recently in 2018 by the Delhi High Court in the case M/S United India Insurance ... vs Jai Parkash Tayal, in the context of genetic disorder exclusion.

Every one is aware that insurance is an economic necessity for the modern man and the institutions that are set up to facilitate the progress of the economy. Naturally the contract of insurance has to be a useful tool of protection. The SC also pointed this out by stating: “An unfair and untenable or irrational clause in a contract is also unjust, amenable to judicial review. In common law a party was relieved from such contract. In Gillespie Brothers & Co. Ltd. v. Roy Bowles Transport Ltd., 1973 (1) Q.B. 400, Lord Denning for the first time construing the indemnity clause in a contract stated that the court to permit party to enforce his unreasonable clause, even when it is so unreasonable, or applied so unreasonably, would be unconscionable…”

Thus, insurers in this country must accept that every citizen has a right to insurance under the Constitution, as per the economic needs of the population. This brings to fore the need for the need to weed out the many bad practices on the underwriting side such as cancellation of policies, non-renewal of policies and refusal to give much needed policies to members of the public without serious reasons/breaches of insurance contractual requirements.