DISTRICT CONSUMER DISPUTES REDRESSAL FORUM-II

U.T. CHANDIGARH

Monika Rao d/o Sh. Ramchander, House No.13, Sector 8-A, Chandigarh 160009.

                                      ---Complainant.

Versus

Aviva Life Insurance Company Ltd., SCO 80-81, Sector 9D, Chandigarh Pin 160009.

---Opposite Party

BEFORE:  SMT. MADHU MUTNEJA, PRESIDING MEMBER

                   SHRI JASWINDER SINGH SIDHU, MEMBER

Argued by:  Complainant in person

                        Sh. Jaipal Singh, proxy counsel for Sh. Arun Dogra, Counsel for OP.

PER JASWINDER SINGH SIDHU, MEMBER

1.                           In brief, the case of the complainant is that on the representation of Ms. Manju Sharma, an employee of the opposite party, she purchased a policy having annual premium of Rs.20,000/-.  She paid three regular premiums.  In September 2012, the complainant received a renewal letter from the opposite party.  When she went to the bank and enquired about the fund value she was told that she would get only Rs.25,000/- or Rs.28,000/-. 

          According to the complainant, she received the policy account statement, as per which the fund value was Rs.34,045.68 as on 25.9.2012 whereas it was Rs.34,296/- as on 19.10.2012.  However, on 28.10.2012, the complainant was surprised to receive a cheque of Rs.20,000/- only.  The complainant approached the opposite party where she was told that the policy was closed because the fund value was going down.  According to the complainant the aforesaid acts of the opposite party amount to deficiency in service and unfair trade practice.  Hence this complaint. 

2.                           In its written statement the opposite party admitted that the complainant obtained the policy in question from it having annual premium of Rs.20,000/- and sum assured of Rs.1,00,000/-.  It has also been admitted that the complainant deposited three premiums against the policy in question.  It has been denied that the complainant was told that she was required to pay three premiums only.  It has been averred that the term of the policy was 20 years.  It has further been averred that the policy of the complainant was a unit linked policy wherein the premium of the complainant, after deducting administration and mortality charges, was invested in general market.  According to the opposite party, the fund value of the policy was never static and was based on fluctuation in general market.  It has been pleaded that as the complainant did not deposit any premium which became due on and after September, 2012, therefore, the policy automatically stood terminated at the expiry of reinstatement period and the surrender value was paid to the complainant as per terms and conditions of the policy.  Pleading that there is no deficiency in service or unfair trade practice on its part, prayer for dismissal of the complaint has been made.

3.                           We have heard the complainant in person, learned counsel for the opposite party and have gone through the documents on record.

4.                           The complainant had subscribed for the Aviva Save Guard Unit Linked Policy by paying a premium of Rs.20,000/-.  The complainant in the complaint has stated that the insurance agent, who advised her to invest in the said policy plan of the opposite party, had claimed that it would generate more money than the FDR which she had been maintaining with her bank.  While accepting the proposal of the complainant, a policy for a term of 20 years was issued and the complainant was required to pay the premium amount for 20 years till the maturity date i.e. 18.9.2029.  The complainant paid three regular premium installments and on enquiring from the office of the opposite party, she was told that the value of the policy was between Rs.25000 to Rs.28000/-.  

5.                           The complainant surprised at the fate of her investment, repeatedly enquired about the status of her policy.  The complainant claims that all the tall promises made by the agent of the opposite party while explaining the features of the policy, failed to advice her in right manner so as to enable her to invest in the plan mentioned by the agent.  The complainant has also claimed that in order to service the three regular premiums, she also had to get her FDR of Rs.40,000/- cancelled with the bank and had lost interest on the said FDR.  The complainant because of her personal difficulties was not able to pay any further premium. The complainant is aggrieved at the receipt of Rs.20,000/- only from the side of the opposite party as this amount did not match with the value of the policy which was disclosed to her when she had visited the office of the opposite party.   

6.                           The opposite party while defending its action has claimed that the complainant was properly advised before she voluntarily made a proposal for the policy which was issued to her on acceptance of her proposal.  The opposite party has also stood its ground that as the fund value of the policy of the complainant had dwindled to less than the first premium amount paid by the complainant, therefore, the said policy was terminated and an amount equivalent to the first premium was disbursed to her.   It is worth mentioning here that the due date of payment of fourth premium, was 18.9.2012 and as the complainant did not make any payment beyond this date, the said policy had come into the lapse mode, and beyond the period of revival the opposite party was duty bound to treat the policy of the complainant as discontinued one for the reason that the complainant did not pay the fourth premium installment and there was no effort on her part to revive the policy which had lapsed for non payment of premium. 

7.                           The case of the complainant is squarely covered under clause 7 of the Insurance Regulatory and Development Authority (Treatment of Discontinued Linked Insurance Policies) Regulations, 2010 which is reproduced as under :-

“Obligations of an insurer upon discontinuance of a policy

7.         The obligations of the insurer in this regard shall be as follows:-

i.          To impose discontinuance charges only to recoup expenses incurred towards procurement, administration of the policy and  incidental thereto.

ii.         To design the discontinuance charges to encourage the policyholder to continue with the contract for the full term;

iii.       To ensure that the discontinuance charges reflect the actual expenses incurred.

iv.        To structure the discontinuance charges within the statutory ceilings on commissions and expenses and

v.                  To ensure that the charges levied on the date of discontinuance (as a percentage of one annualized premium) do not exceed the limits specified below:-

 AP - Annualised premium

FV- fund value on the date of discontinuance

Provided that where a policy is discontinued, only discontinuance charge may be levied by the insurer, and no other charges by whatsoever name called shall be levied.

Provided that no discontinuance charges shall be imposed on single premium policies and on top ups.”

Thus, from the perusal of Regulation 7, extracted above, it is crystal clear that the opposite Party, could have at the most deducted an amount of Rs.1,000/- from this policy and refunded the remaining amount to the complainant at its own.  However, the opposite party miserably failed to do so.  In such circumstances, the act of the opposite party in not offering this option to the complainant and even while defending its action of paying Rs.20,000/- to the complainant, did not offer her the choice of treating her case as per IRDA regulation mentioned above had acted in a deficient manner.  The opposite party, even at the time of filing its reply, did not offer to treat the case of the complainant as per these guidelines so as to invite any leniency from our side.   Hence, the opposite party is found deficient in rendering proper service to the complainant.  Therefore, in the given situation, the present complaint deserves to succeed and the same is allowed against the opposite party.

8.                           In view of the above discussion, the present complaint is allowed and the opposite party is  directed as under :-

                                                 i.                  To pay the amount of Rs.60,000-1000 = Rs.59,000/- as per Regulation 7, extracted above, less the amount of Rs.20,000/- already paid ;

                                               ii.                  To pay Rs.10,000/- as compensation for mental agony and harassment.

9.                           This order be complied with by the opposite party, within 45 days from the date of receipt of its certified copy, failing which the amounts mentioned in para 8 above shall carry interest @18% per annum from the date of this order till actual payment.

10.                       Certified copy of this order be communicated to the parties, free of charge. After compliance file be consigned to record room.

Announced

24.07.2013.

Sd/-

 (MADHU MUTNEJA)

PRESIDING MEMBER

Sd/-

(JASWINDER SINGH SIDHU)

MEMBER

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