A Study On Breach Of Contract By Health Insurance Companies In India

This paper critically examines the breach of contract in health insurance within the Indian legal and regulatory framework, with particular attention to its legal, economic, and psychosocial implications for policyholders. Despite the rapid expansion of the Indian health insurance sector post-liberalization, structural deficiencies—such as inadequate policy transparency, inconsistent claims settlements, and regulatory inefficiencies—have contributed to widespread consumer grievances. The study aims to interrogate whether existing legal mechanisms sufficiently safeguard policyholder rights and to what extent breaches in claim settlements affect policyholders’ mental health and financial stability Adopting a mixed-methods approach, the research combines doctrinal analysis with empirical fieldwork involving 315 respondents across Tamil Nadu. It analyzes statutory frameworks such as the Indian Contract Act, 1872, Insurance Act, 1938, and the IRDA Act, 1999, alongside relevant IRDAI regulations and case law. The study reveals that common breaches include unjustified claim rejections, delay in disbursal, inadequate disclosure of exclusions, and coercive selling practices. These lead to heightened policyholder distress, especially where access to care is delayed or denied. The findings expose a significant gap between regulatory intent and on-ground enforcement, underscoring the limitations of consumer redressal mechanisms and the lack of standardized policy language. The paper calls for legal reforms, including stricter regulatory enforcement, standardization of health policy contracts, mandatory mental health coverage, and expansion of insurer accountability through clearer grievance redress systems. This research contributes to contemporary debates on the interface between insurance law and public health, advocating for a more transparent, equitable, and enforceable health insurance regime. It urges policymakers and stakeholders to recognize that remedying contract breaches in health insurance is not only a matter of legal compliance but also essential for protecting the dignity, well-being, and financial resilience of insured individuals in a growing healthcare economy.