Haryana

StateCommission

A/379/2019

STAR UNION DAI ICHI LIFE INSURANCE COMPANY LTD. - Complainant(s)

Versus

REKHA - Opp.Party(s)

S.R.BANSAL

12 May 2023

ORDER

STATE CONSUMER DISPUTES REDRESSAL COMMISSION HARYANA, PANCHKULA

 

                                                      First Appeal No.379 of 2019

                                                Date of Institution: 18.04.2019

                                                          Date of order:12.05.2023

 

Star Union Dai-Ichi Life Insurance Company Ltd. 11^th Floor, Raghuleela Arcade, I.T. Park, Sector-30 A, Opposite Vashi Railway Station, Vashi, Navi Mumbai 400703.

                                                                    .....Appellant

Versus

 

Rekha W/o Late Sh.Parveen Malik, S/o Sh.Randhir Singh, R/o Near Hanuman Mandir, Kutani, Rajkheri, Distt. Panipat 132103.

                                                                             .....Respondent

CORAM:    S.P.Sood, Judicial  Member

                  

                  

Present:-    Mr.S.R.Bansal, Advocate for theappellant.

                   Ms.Saroj Maan, Advocate for the respondent.

 

                                                ORDER

S P SOOD, JUDICIAL MEMBER:

          The brief facts of the case are that husband of the complainant has taken a insurance policy SUD Life Aayushmaan Non Linked Deferred Participating Plan vide policy No.00980625 from opposite party with sum assured of Rs.6,20,000/- starting from 29.06.2016.  As per policy in case of death of assured the sum assured was  to be (6,20,000/- x 150%) i.e. Rs.9,30,000/- plus other benefits. The complainant’s husband has paid Rs.23,444/- as premium to the OP. During the subsistence of the policy, the  husband of the complainant died on 02.09.2016 following heart attack.   This is how complainant being his nominee lodged the death claim with the OPs after completing all the formalities, but OPs did not pay any heed and finally repudiated her claim illegally.  Thus there being  deficiency in service on the part of the OPs, hence the complaint.

2.      Upon notice, OPs filed written version raising preliminary objections regarding want of cause of action and concealment of true and material facts.  On merits, it was pleaded that as per terms and conditions of the policy Deceased Life Assured (DLA) was required to disclose and provide all the details of the other insurance policies obtained by him or applied with other insurance companies but DLA had replied  in this regard as negative in the proposal form, added thereto the insured died within a period of 2-3 months itself of issuance of policy.  During investigation, it was found that DLI had obtained another policy from Bharti Axa Life Insurance on 26.02.2016 for a sum of Rs.12/- lacs prior to submitting the proposal form with the OP for this policy. The DLA suppressed the material facts from OPs. That being so the OPs rightly repudiated the claim vide its letter dated 26.03.2017 on the ground of misrepresentation and suppression and concealment of material facts. Thus there was no deficiency in service on the part of the Ops and requested to dismiss the complaint.

3.      After hearing both the parties, the learned District Commission, Karnalhas allowed the complaint vide order dated 20.02.2019, which is as under:-

“Thus, as a sequel to above discussion, we allow the present complaint and direct the OPs to pay the sum assured to the complainant alongwith interest @ 9% per annum from the date of repudiation  of the claim till its realization. We further direct the OP to pay Rs.25,000/- to the complainant for mental agony, harassment and towards liti9gation expenses.”

4.      Feeling aggrieved therefrom, OP-appellant has preferred this appeal before this Commission.

5.      These argumentswere advanced by Sh.S.R.Bansal,learned counsel for the appellant as well as Ms. Saroj Maan, learned counsel for the respondent. With their kind assistance the entire record of appealas well as original record of District Commission including whatever evidence has been led on behalf of  both the parties has also been properly perused and examined.

6.      It is not disputed that husband of the complainant had purchased ainsurance policy SUD Life Aayushmaan Non Linked Deferred Participating Plan vide policy No.00980625 from opposite party in which sum assured was Rs.6,20,000/- starting from 29.06.2016.  As per the said policy, in case of death, sum assured was (6,20,000/- x 150%) i.e. Rs.9,30,000/- plus other benefits. It is also not disputed that  complainant’s husband has also tendered Rs.23,444/- as premium to the OP. It is also not disputed that during the subsistence of the policy, the  husband of the complainant passed away on 02.09.2016 due to heart attack.    As per complainant-respondent, it was the agent of the insurance company who had filled-up the proposal form  of his own submitting the information sought in various columns even without consulting them, as such she was entitled for the insured amount. The premium paying tenure was 20 years and policy tenure was also the same. The complainant has not concealed any material facts from the insurance company.  Agents of the insurance companies generally fill up the proposal form giving such informations which may not find any such problem for the concerned officers of the company to accept the said proposal and issue the policy as desired by the prospective holder as these agents are to get some commission.

7.      It is a matter of common experience, insurance companies often repudiate claims on grounds of non-disclosure of material information by the consumer. However they conveniently forget that there is an even greater statutory obligation cast on them to give full information to the consumer about the products they sell.

The responsibilities of the insurer towards full disclosure is even more because (a) the Insurance Regulatory and Development Authority’s (IRDA) Regulation on the protection of Policyholders’ Interests’ specifically mandates this and (b) the contracts of insurance, which are ‘Adhesion Contracts’ or ‘Standard Form Contracts’ are drawn up unilaterally by the dominant party-the insurer. The consumer, being the weaker party has no bargaining power, nor knowledge of the terms of the contract. So, the apex court has often said that these contracts, therefore, demand a very high degree of fairness, good faith and disclousure on the part of the insurer.

          Here are two cases where the Supreme Court has reminded insurers of their obligation in this regard and warned them against violations. The two cases also show-case the kind of unfair practices indulged in by insurers.

          In Texco Marketing Pvt. Ltd. Vs TATA AIG General Insurance (CA No. 8249 of 2022, date of judgment: November, 9, 2022), for example the insurance company insured after due inspection, a shop located in a basement under the Standard Fire and Special Perils Policy, despite the fact that the policy specifically excluded basements. Subsequently, following a fire, when the policy holder made a claim, the insurer repudiated it on the basis of the exclusion clause!

          While ruling in favour of the consumer, the apex court observed that first and foremost, the insurer did not bring the exclusion clause to the notice of the consumer. And then, despite having knowledge of the exclusion clause, it insured the basement and received the premium benefits. After this, repudiating the policyholder’s claim on the basis of the exclusion clause was certainly an unfair trade practice. “This view is fortified by the finding that the exclusion clause is an unfair term, going against the very object of the contract, making it otherwise un-executable from its inception,” the apex court said.

          Some of the observations of the court in this case would go a long way in upholding the rights of the policyholders. For example, the court made it clear that an exclusion clause, if not brought to the notice of the consumer by the insurer or agent, would not be binding on the consumer. Similarly, an unfair term in an insurance contact would be un-executable. The Supreme Court also reminded insurers that an exclusion clause “is not a leverage or safeguard for the insurer, but is meant to be pressed into service on a contingency, being a contract of speculation”.

          Said the court: “Before we part with this case, we would like to extend a word of caution to all the insurance companies on the mandatory compliance of Clause (3) and (4) of IRDA Regulation, 2022. Any non-compliance on the part of the insurance companies would take away their right to plead repudiation of contract by placing reliance upon any of the terms and conditions included thereunder”.

8.      The repudiation of the claim was bad in the eyes of law and was not justified. The OP has illegally repudiated the claim of the complainant. The learned District Commissionhas rightly allowed the claim of the complainant. The learned District Commission had committed no illegality while passing the order dated 20.02.2019.  The appeal is also devoid of merits and stands dismissed.

9.      The statutory amount of Rs.25,000/- deposited at the time of filing the appeal be refunded to the complainant-respondent-Rekhaagainst proper receipt and identification in accordance with rules, after the expiry of period of appeal/revision, if any.

10.              Applications pending, if any stand disposed of in terms of the aforesaid order.

11.              A copy of this order be provided to all the parties free of cost as mandated by the Consumer Protection Act, 1986/2019. The order be uploaded forthwith on the website of the commission for the perusal of the parties.

12.              File be consigned to record room after due compliance.

 

12thMay, 2023                                                                     S. P. Sood                                                                                                                            Judicial Member                            

S.K(Pvt. Secy.)