Insurance Coverage for Mental Illnesses


The Delhi High Court in response to a woman’s demand for reimbursement of expenses for treatment of ‘Schizoaffective’ disorder, which was earlier denied by the National Insurance Company Ltd (‘NICL’) pursuant to an exclusion under clause 4.10 of the healthcare policy, held that that all insurance companies are liable to give effect to Section 21(4) of the Act. It asserted that mental illnesses ought to be covered without any discrimination.

The petition posed a significant question about insurance coverage for mental disorders and the provision of non-discrimination relating to such illnesses, as enshrined under Sections 21(1) (a) and 21(4) of the Act. The High Court after a detailed analysis, iterated that mental disorders must be treated in the same way as physical illnesses. As a result, the Court identified that availability of insurance “for mental disabilities or conditions is, therefore, not only important but is an essential need.”

The High Court also held that the decision of the Insurance Ombudsman in holding that the Act was not applicable to petitioner was untenable. The Act took effect in May 2018 and hence the exclusion in NICL’s healthcare policy with regard to “all psychiatric and psychosomatic disorders/diseases”, as stated in clause 4.10, is contrary to law. Thus, the petitioner was entitled for reimbursement of her claim as per the provisions of the Act.

The High Court strongly criticised IRDAI and highlighted the fact that the regulator’s duties are extensive and critical and if an insurance provider fails to comply with any law / regulation / policy, the IRDAI cannot remain indifferent and immediate action must be taken. The IRDAI has a responsibility to thoroughly supervise and ensure that all insurance providers comply with the provisions of the Act for the benefit of those who receive mediclaim insurance.

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