The Employer Who Wanted Retro Cover

Neither, and the reasons are separate.

Backdating cover to 15 March would represent to the insurer that a risk began on a date when the premium had not been received and no cover had been agreed. That is a misrepresentation of the contract's inception, and it offends the principle that risk is assumed only from receipt of premium. It would also mean the insurer, had it known the truth, would have been asked to fund a hospitalisation that had already occurred - which is not insurance but a claim presented in the guise of cover.

Omitting the supervisor from the member data is concealment of a material fact. In group health insurance the employer is the master policyholder and stands in the position of the proposer; the duty of good faith, including disclosure of material facts concerning the members, rests with it and with those advising it. A hospitalisation in progress at inception is about as material as a fact can get, both because it is a known claim and because it bears directly on the underwriting of the group. Adding him later would also make the insurer's member records false. The fact that the old policy expired on 31 March and the new one starts on 1 April does not create a licence to disguise the sequence.

The agency should tell the HR head clearly, and in writing, that neither request can be made, and then help him solve the real problem. The honest submissions are: a proposal for cover from 1 April, with the supervisor declared, and the 22 March hospitalisation disclosed. The insurer can then underwrite on true facts - for example by excluding the cardiac condition for a defined period for that member, or by loading the premium, or by offering cover without that particular pre-existing condition while continuing to cover the rest of the group. The agency should also explain the value of continuity: the group's prior history with the old insurer may support better terms, and contesting the old insurer's liability for the hospitalisation as a claim in the expiring policy period is a legitimate route worth checking.

If the agency complies instead, it has participated in presenting a false proposal. The insurer can repudiate the supervisor's claim, and may treat the group policy itself as voidable for non-disclosure, leaving 600 employees uninsured or the employer facing recovery. The agency faces conduct action and potential loss of its registration, and the individuals involved face consequences under the agency's misconduct rules. The ₹18 lakh fee is irrelevant to the answer; if anything, it is the reason the conflict must be documented and escalated.

The agency should make refusal the default path and give its staff a procedure that does not depend on individual courage.

First, a written escalation rule: any client request to backdate, amend a material fact, omit or delay declaring a member, or otherwise present a proposal other than truthfully must be escalated to the principal officer or compliance function the same day, recorded in a register with the client's name and the request made, and answered in writing.

Second, standard declination language: a templated reply that explains why the request cannot be made, offers the alternative routes (declaration with exclusion or loading, checking the expiring policy's cover for the event, prospective addition of members under the insurer's rules), and makes clear the agency values the relationship but cannot proceed otherwise.

Third, proposal quality controls: a checklist signed by the client confirming that all known claims, hospitalisations and member changes have been disclosed, and a review step before submission for groups above a threshold.

Fourth, training and tone: staff should be told that a lost account is an acceptable outcome and a false proposal is not, and that the agency will back them when they refuse.