Sri Debasis Bhattacharya, Member
Brief facts, which are germane for the purpose of deciding this complaint case, are as under:-
The Complainant, being authorized by the Govt. of West Bengal in the Consumer Affairs Department vide Order No. 141-CA/JS/2006/CA/FBP/ 2M-04/06 dated 26-07-2006 to act as representative of interest of consumers in general has got knowledge of alleged wrongdoing on the part of the OP Insurance Company and their agents, in course of its doing business of insurance and after conducting necessary enquiry as to the allegations made by different individual consumers as to their sufferings and consequential injustice decided to file this complaint case.
The Complainant stated to have got first information of alleged wrongdoing on the part of the OP Insurance Company and their agents, from one Mr. Biman Krishna Bose vide letter dated 01-03-2013. As reported, the OP No. 8, working under the OP No. 6 offered Sri Bose for selling two policies of yearly premium for a sum of Rs. 30,000/- each. To this, as Mr. Bose expressed his inability to pay such high premium, the concerned agent reportedly assured him to convert the policies into a single premium policy by reducing the yearly premium to Rs. 20,000/- each from the next year. After receiving the policy, he reportedly contacted the OP No. 8, but he did not lend any helping hand to him. On 28-07-2012, OP No. 9 reportedly approached Sri Bose with an offer to convert his existing policies into a single premium policy upon additional payment of Rs. 20,000/- for each policy. It is alleged that the OP No. 9 offered him to pay Rs. 20,00,000/- to his nominees in case of premature death. The amount of Rs. 20,000/- each was paid through two cheques on 28-07-2012. On 10-08-2012, as alleged, OP No. 9 again met Sri Bose with the proposal for payment of Rs. 14,000/- more to enable him convert his existing policy into single premium policy. Reportedly, as advised, Sri Bose issued another cheque for a sum of Rs. 14,000/-. However, despite due compliance of the advice of the OP No. 9, allegedly, nothing was done. Instead a new policy having annual premium of Rs. 40,000/- was sent to him. After receiving the third insurance policy on 11-08-2012, Sri Bose met the OP No. 3 on 13-08-2012 and expressed his grievance. Then, as per advice of the OP No. 3, Sri Bose submitted request letter for cancellation of the said policy on that day itself. It is alleged that the Branch Manager denied to issue any acknowledgement even after receiving said application. As nothing was done till 20-08-2012, Sri Bose sent another letter dated 21-08-2012 seeking refund of Rs. 60,000/-. Subsequently, the OP Insurer vide its letter dated 12-10-2012, expressed its inability to cancel the 1st two policies citing implications of free look period. Thereafter, the OP Insurer vide another letter dated 07-02-2013, offered to amalgamate all the policies subject to surrender of original policies together with certain other documents. Considering all the aspects of allegations made by Sri Bose, the State Government made a pre-litigation effort to settle the dispute through mediation/conciliation, but the OP No. 3 did not respond to such initiative of the State Government.
The Complainant received another complaint from one Ms Almas Ibrahim contending inter alia that one Mr. Rahul Jaiswal allured her for an one time investment policy with the OP Insurer against payment of Rs. 35,000/- and also assured to redeem her ICICI Prudential Life Insurance Policy. Consequent to such effort, she handed over requisite cheque for a sum of Rs. 35,000/- and also signed the application form. However, on receipt of the insurance policy, she noticed that it was nothing but a normal policy, whereof she was required to pay annual premium of Rs. 35,000/- for 18 years. Being aggrieved, she wrote a letter to the OP Insurer for cancellation of the policy in question. The endeavour of the State Govt. to mediate in the matter also did not yield any positive result as the OP Insurer did not respond positively to its call.
The Complainant stated to have received information of similar allurement being made by the OP no. 8 of providing insurance policy against one time premium of Rs. 50,000/- in case of one Sri Gourishankar Mitra vide his letter dated 27-02-2013.
It is alleged by the Complainant that, in general, OPs, severally and/or jointly indulged in the practice of misleading unsuspecting consumers. It is further claimed by the Complainant that, apart from the aforesaid three specific cases, it also received several complaints of such deceiving tactics being adopted by the OP Insurer and its associates from several aggrieved individuals over phone. Therefore, taking into consideration the enormity of the situation, the Complainant, in the larger interests of consumers filed this case.
OP Nos. 1&3 challenged the complaint case by filing W.V., thereby denying inter alia, all the material allegations of the Complainant. In their defence, it is stated by these OPs that no cause of action ever arose in favour of the Complainant and against the OPs to file the present complaint and hence, the same is liable to be dismissed. It is further stated that if any fraud has been practiced by their Corporate Agent, i.e., OP Nos. 6&7, they did so in their individual capacities and these OPs are in no way liable for the same.
As regards the complaint of Sri Bose, it is stated that initially they were reluctant to accede to his request as it was made beyond the free look period. However, as a customer centric organization, OPs, vide their letter dated 17-12-2013, offered the policyholder to convert the policy nos. 005056262 and 005055333 into 5 years premium paying term and further in order to do the same, informed the relevant requirements. However, the policyholder did not respond to such proposal. Thereafter, these OPs called the policyholder in order to resolve the problem, whereby the policyholder agreed for full and final settlement of his issue at an amount of Rs. 1,18,000/-, which was inclusive of the total amount of initial premium of Rs. 1,00,000/- for the three policies along with interest @ 18%.
As for the complaint of Ms Almas Ibrahim, it is stated that in this case also as the cancellation request was made post free look period, these OPs could not respond positively to the request of the policyholder. Later on, however, the premium amount was refunded to the policyholder on 02-12-2013.
Regarding the grievance of Mr. Gouri Shankar Mitra, it is stated that as the request for cancellation of policy was made within the freelook period, the policyholder was refunded a sum of Rs. 49,903/- after deducting nominal stamp duty charges and such intimation was communicated vide letter dated 11-03-2013.
It is further stated that, as soon as the OPs became aware of the fraudulent act of the broker/agent, i.e., OP Nos. 6 and 8, these OPs vide letter dated 20-05-2013 terminated the contract with the said OPs. Alleging that the complaint case has been filed on the basis of hearsay evidence and further the alleged victimization of 30 – 40 policyholders being not substantiated with evidence or record, mere inference and probabilities is not admissible before a Court of Law. Accordingly, these OPs prayed for dismissal of the case.
OP No. 10 sent its W.V. by post stating inter alia that the complaint case is not maintainable against it as there is no averment nor any relief sought for against this OP. It is further stated that it does not adjudicate disputes between individual policyholder and the Insurance Company; it only lays down broad policy while discharging its regulatory and supervisory functions.
Points for consideration
- Whether the instant case is maintainable under the Consumer Protection Act, 1986?
- Whether there is any deficiency in service on the part of the OPs, as alleged?
- Whether the Complainant is entitled to any relief, as prayed for?
Decision with reasons
Point No. 1:
The present case is akin to a class suit. The position of law in this regard is quite clear. In terms of Sec. 2(1)(b) of the Consumer Protection Act, 1986, ‘complainant’ mans……. (iii) the Central Government or any State Government….’ Further, Sec. 12 (d) of the Act empowers the State Government, in its individual capacity or as a representative of interests of consumers in general to file a complaint.
In this case, although the Complainant has mentioned three specific instances of alleged unfair trade practice on the part of the OPs, it is contended that it has received a series of non-statutory complaints/telephone calls which indicate that around 30 – 40 unidentifiable victims have been affected by the wrongdoing of the OPs, involving an approx. value of service of Rs. 50,00,000/-.
Thus, we find that from whatever angle we look at it- be it from pecuniary jurisdictional point of view or from territorial jurisdictional aspect, there is no infirmity with the present complaint case.
This point, thus, answers in favour of the Complainant.
Point Nos. 2&3:
Both these points are taken up together for the convenience of discussion.
The present case hovers around alleged misselling of insurance policies to gullible consumers by the agents of the OP Insurer and such fact has been admitted by the OP Insurer in no uncertain terms.
OP Insurer nevertheless flaunted its customer-centric approach contending inter alia that on the basis of complaints of the concerned policyholders, not only it refunded the deposited sum to them, but also cracked whip and cancelled the agency of concerned agent. On the face of it, although, it may appear that the OP Insurer swears by the cause of its policyholders, a closer look into the dispute, however, proves otherwise.
It appears, both Mr. Biman Krishna Bose and Ms Almas Ibrahim cried foul over misselling of insurance policies to them by the agents of the OP Insurer and sought refund of deposited sum in the months of August, 2012 and June, 2012, respectively. Against such complaints, we find, in both the cases, initially the OP Insurer citing thump rule, turned down such requests. It further appears that, in both the cases although the Complainant tried to settle the dispute across the table through heart to heart discussion and roped in the Department of Consumer Affairs & Fair Business Practices, Govt. of West Bengal for this purpose, the OP Insurer simply choose to skip the tripartite meetings organized by the said Department. Ultimately, once the instant complaint case was initiated against them in August, 2013, it appears, the OP Insurer all on a sudden discovered the virtue of refunding the money to the affected parties. It may not be out of to place to mention here that although the OP Insurance Company made a desperate attempt to show that acting on the complaints of the aggrieved policyholders, it cancelled the agency of concerned corporate agent, i.e., OP No. 8, a glance through the agency termination letter dated 20-05-2013 reveals that on the request of the said agent, the OP Insurance Company terminated its agency. It makes it absolutely clear, therefore, that the OP Insurance Company did not act on its own, but it was the other way around.
When one voluntarily acts upon the grievance of a customer and initiates necessary steps to reign in acts of misdeeds of unscrupulous agents, it reflects one’s genuine intent to curb a menace. However, when extraneous considerations precipitates such action, this cannot be said so. This is exactly what has happened in this case. When M/s Biman Krishna Bose and Almas Ibrahim lodged complaints with the OP Insurer about wrongful acts of its agents, the OP Insurer preferred to look the other way and showed the rule book to those aggrieved customers and denied refund of deposited amounts as per their demand. Even when the Department of Consumer Affairs & Fair Business Practices intervened and called up the OP Insurer for an amicable settlement of the issue, the latter did not respond positively to such call. To our mind, therefore, merely because the OP Insurer refunded the deposited sum to the abovenamed customers, it cannot be said that such remedial action was taken keeping in mind (only) the interests of concerned customers. Although OP Insurer has refrained from elaborating the circumstances that impelled such change of heart; it seems, initiation of present complaint case played catalyst and ignited such welcome course correction.
It is stated by the Complainant that apart from the above-named three persons, viz., Mr. Biman Krishna Bose, Ms Almas Ibrahim, and Mr. Gouri Shankar Mitra, it has been inundated with complaints of misselling of insurance policies by the OPs from 30 – 40 odd persons over phone and the Complainant estimated the value of loss to the affected persons at Rs. 50,00,000/-. The OP Insurer has called in question such figure on the ground that neither copy of so-called enquiry report(s) has/have been placed on record, nor whereabouts of such persons actually given by the Complainant.
It is a fact that no authentic document is furnished from the side of the Complainant to drive home its contention. However, if we take an empirical view of the matter, it would appear that the figure quoted by the Complainant is quite moderate.
It is an open secret that the way insurance products are designed and sold in India is much like a trap, with companies and agents hand in glove with each other to fleece hapless consumers of their hard-earned money.
This is a vicious circle where Insurance Companies engage agents, set astronomical targets and allure them with high incentives subject to fulfillment of said targets. In order to fulfill such targets, agents only project those insurance products that earn them high returns and enable them achieve their targets. In doing so, agents hardly bother to understand the specific need of customer.
What is worse, the pitch is always verbal and only a rosy picture is depicted before the prospective policyholder while grey areas are kept under the wrap. The form is filled up by the agents themselves without giving any chance to the prospective customer to have a glimpse through the pros and cons of the policy. The prospective customer is then persuaded to put his/her signature on the proposal form and issue necessary cheque. The policy document comes after the money has been invested. It is commonly seen that majority of the policyholders do not go through the intricate details of policy documents out of their innocent trust/faith in the sincerity of purpose of concerned agents, and handful of those who try and read through the lines of the voluminous policy documents, hardly understands the complexities of policy wordings and soon give up and decide to get on with one’s life.
By the time one realizes one’s folly, the free look period is over. Out of wit’s end, one knocked the door of the Insurer, who shows the rule book to deny return of money to the aggrieved policyholder. In the end, one is left with no other choice but to either stay invested, else forfeit the initial deposited sum.
The menace of misselling of insurance products has already taken an alarming shape and the situation is getting worse with every passing day, yet, unscrupulous Insurance Companies are seemingly having a free run with their sinister design. According to the IRDAI Annual Report 2013-2014, during the said financial year, the life insurance industry received 3,74,620 complaints out of which 85,284 complaints related to LIC and 2,89,336 complaints related to private sector life insurers. The said report further reveals that total 30,825 nos. of complaints were registered against the OP Insurer during the year 2013-2014.
By definition, misselling means selling a product by giving a wrong picture of a product. It may include, giving wrong information, giving unrealistic information, not giving full information about the product. A common practice that is seen in this regard is where the agent sells the policy promising a single premium mode or a limited term policy, but it actually turns out to be a regular premium mode. And the customer has no option but to surrender the policy or stop paying the premium. According to a survey conducted by Ernst & Young, compared to different types of frauds, Insurance Companies are mostly affected by “misselling” due to premeditated fabrication or fraudulent representation of material facts.
Coming back to the core issue of misslling of insurance policies to customers of OP Insurer, as found hereinabove, the OP Insurance Company has admitted the factum of wrongdoing on the part of its agent. Further, we observe that although necessary complaint in this regard was lodged with the OP Insurance Company by the affected customers, the OP Insurance Company initially neither sought for any report from its agent, let alone take any punitive action against the guilty agent, nor did it return the money to them. Even the intervention of the Department of Consumer Affairs & Fair Business Practices, Govt. of West Bengal went in vain. However, only after the present complaint case was initiated against it, the OP Insurer swung into action and refunded the money to the affected customers.
Let us not forget that belated action often brings with it a whiff of irrelevance. The OP Insurer has not clarified as to why it did not act upon the complaints of the affected policyholders, namely, Mr. Biman Krishna Bose and Ms Almas Ibrahim initially or respond to the notices issued by the Department of Consumer Affairs & Fair Business Practices, Govt. of West Bengal to settle the issue amicably. Therefore, merely because the OPs acted on the complaints of the aggrieved parties post this complaint case, it cannot be stated with conviction that the same was indeed an earnest act on its part. Certainly, we cannot be oblivious of the fact that such course correction at a later stage does not camouflage the fact that the OP Insurer initially tacitly condoned the misdemeanor of its agents instead of cracking the whip immediately upon receipt of complaints from the aggrieved consumers. Therefore, it seems, OP Insurer is guilty of abatement of unfair trade practice being engineered by its agents.
Further, although the OP Insurer has entirely blamed its agents for the misselling of insurance policies to the aggrieved policyholders and refused to shoulder any blame for the misdeed of said agents, it is the settled position of law that the Principal should be held vicariously liable for every act of omission and commission on the part of its Agent. To our mind, therefore, the OP Insurer cannot avoid its liability.
Lastly, although the OP Insurer has doubted the estimated loss of Rs. 50,00,000/- as figured out by the Complainant and sought to pick hole of such estimation over lack of specifics, if the IRDA data is any indicator, there is no reason to believe that apart from Mr. Biman Krishna Bose, Ms Almas Ibrahim, and Mr. Gouri Shankar Mitra, no other policyholder of OP Insurer made similar complaint to the OP Insurer.
Further, if the initial dismissive response of the OP Insurer towards the grievances of the aforesaid two persons is any pointer vis-à-vis the compelling circumstances under which the OP Insurer acted decisively later on, there is no reason to believe that the OP Insurer resolved complaints of other policyholders with similar alacrity on its own without the intervention of the Court of Law/Regulatory authorities and reprimanded guilty agents for indulging in unfair trade practice. In fact, no statics is placed before us from the side of the OP Insurer to inspire confidence about their zero tolerance towards the menace of misselling of insurance policies. Denying the obvious does not alter the hard reality.
There is general perception that Insurance Companies, cutting across Public and Private sector, tend to be brutally indifferent to the real cause of its customers. And, could this be described, not simply as callousness and negligence, but as something more disturbing – a tendency to relish the vulnerability of helpless Insured, especially from a position of authority and financial clout!
Thus, taking into consideration the gravity of the matter in its entirety, we hold both the OP Insurer as well as its agent jointly and severally liable to pay compensation to the tune of Rs. 8,00,000/- to the Complainant together with litigation cost for a sum of Rs. 50,000/-.
Accordingly, both these points are decided in favour of the Complainant.
Hence,
O R D E R E D
that CC/188/2013 be and the same is allowed on contest against OP Nos. 1 & 3 and ex parte against OP Nos. 2, 4 & 5 and dismissed ex parte against rest of the OPs. OP Nos. 1 to 5 shall jointly and severally pay a sum of Rs. 8,00,000/- to the Complainant as compensation and another sum of Rs. 50,000/- as litigation cost within 40 days hence, i.d., OP Nos. 1 to 5 shall be liable to pay interest @ 8% p.a. over Rs. 8,00,000/- from this day till full and final payment is made. The Complainant shall spend the awarded sum for the benefit of hapless consumers.
